Banks Changing Lending Criteria
Since the credit squeeze it has been customary for banks to change their lending criteria on almost a daily basis. How is this going to affect you?
If you are looking to purchase another property you need to be talking to a Mortgage Broker.
With the banks’ criteria being so unpredictable since the credit crisis it is important that you have all your financial data in order and up to date when visiting a broker.
Brokers will know much more about what is going on in the finance world than you or I.
In some circumstances lenders are expecting to have higher than what had become the usual 20% deposit. If you are looking at a no-doc loan, you would be expected to have 30-40% deposit. No-doc loans have lost a lot of their attraction because of the changed criteria, especially on top of the fact that they attract a higher interest rate. Lenders are more cautious than ever before and this is showing in their attitude towards risky lending.
Because prices are not going up as they were in the past 10 years or so, lenders recalculate their lending depending on what funds they have to lend on the day. It used to be that banks would work to a lending allowance for a quarter, but in the past few months risk assessments are evaluated daily.
Pre-approved loans do not even carry the same security as they used to. A loan amount might fall within the criteria of the bank, but the mortgage insurers do not always come to the party with the insurance.
This is changing the whole face of lending at the moment.
Gather as much information as you can before you go looking for another Investment Property.
Filed Under: Property Investment Tips
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