Weekly Wrap - Fri 3rd July
We have come to the end of the financial year and it has been a very big year. Thank you again to everyone that has supported us over the last 12 months. It's been huge and we're really looking forward to the possibilities of the next 12.
Following on from our success at the Australian Broking Awards and the big wins Lauren brought home, we have received even more great news at the State awards. We have been named finalists for both Marketing Campaign of the Year and Regional Office of the Year. We are very proud of ourselves, the team and everyone here.
- A couple of areas that have been topical this week include:
- Refinancing with payment pause, what does that look like?
- Comprehensive credit reporting and what that means and also looks like?
- Thirdly, some client wins, because we love to celebrate those!
Do you want to touch base around the payment pause?
This is a question that we are asked frequently. Interest rates are great and there are still cashbacks offers available. Obviously, we are always looking for ways to save money, so our clients are asking ‘do I have the ability to refinance and take advantage of some of these great offers, even though I have been deferring my loan payments through COVID?’. This is a great question.
Some banks now provide guidance on this. Eg: a bank may need up to six months history on your current mortgages and loans. They are particularly interested in whether your repayments have been made on time and also the conduct on those loans.
Any deferments or missed payments must have been agreed upon with the bank. Once things start returning to normal and cash flow begins to improve, you will need to show that you have returned to your original repayment schedule.
We need to paint a clear picture about what happened during COVID, how are you able to move forward and how you are returning your income to normal. You need to prove that you are able to meet future repayment obligations comfortably. If you can do that, they will consider refinancing - which is really good news.
It has been great to see how the banks have responded to COVID, with so many people having a change in income or change in position. Not only have they helped during the pandemic, but they continue to help people make their way out of it.
September is looming and it will be interesting to see what happens. But it’s good to hear some of the banks starting to come out of this sooner than expected and give clients an opportunity to help them move forward.
Comprehensive credit reporting.
This pushed forward about 12 months ago. What does it mean for you? Previously, lenders used to report on ‘facilities’, such as a personal loan, car loan, home loan or loan enquiry.
Now, however, they are reporting on the two years prior conduct on that ‘facility’. This has become a real challenge for some clients. There could be things you’ve forgotten about; eg: situations where payments were missed simply because the money had been in the wrong account. Or perhaps an overlimit or overdraft fee. These small fees didn't used to be important unless they happened within three to six months prior. Now lenders have access to all of that data for the previous two years. It is reportable and it is being shared across the board. This means that unfortunately, a credit score below 1,200 can have a very adverse effect. A credit score sub-600 would be very problematic.
It is worth noting that there are still some banks that are more favorable with no credit scoring.
If you haven't had a look at your credit score recently, jump onto the Equifax site and download one of their free reports and have a look. We are always happy to take you through it if you want to know what is on there and what it actually means. This is something we want to make sure you’re keeping an eye on at the moment.
We celebrated 10 years as a business earlier this year and so we have begun our first ever round of 10 year check-ins! For one client in particular, we have helped him reduce his interest rate for 10 years in a row. We are super proud of this and this is a testament to the service that the team here provides to our clients.
Another client needed to refinance a mortgage that he had against another property. This was a particularly interesting story because it really demonstrates how differently banks view borrowing capacity.
This client was refinancing a mortgage on a property that he was living in. He also had a separate mortgage on an investment property. We needed to move this loan from a facility that was held in two names, into just the one name. In order to do that, he needed to illustrate sufficient borrowing capacity in his own right.
His existing bank took a conservative approach in viewing the borrowing capacity and his application was unsuccessful there. We met with him and discussed how he could access a more niche policy, which had a more favorable approach to his particular history and borrowing capacity. He had shown great account conduct over the past 6 - 12 months and was able to illustrate that he could meet the repayment obligations, but the two banks had viewed his borrowing capacity very differently. Fortunately, we were able to find one that viewed his situation favourably and were able to secure him the loan. To help this client progress with his plans and future goals after previously being told “no” was a great win.
It is worth noting that the particular funders or lenders that work in this way are not customer facing. So unless you're talking with a broker, or are lucky enough to find one of the few of these lenders that have a branch or allow customers to contact them directly online, you might not know it is a possibility. So it's up to us, as the experts, to know, who is lending. Who can work with a particular situation and also to understand those niche policies. It’s nice to celebrate those wins along the way.
Thank you again for tuning in. A lot of great feedback over the last few weeks, with people reaching out and putting forward questions and topics they'd like to know about. If you have anything topics you’d like covered next week, let us know and we’d be happy to talk through them.