Easier Application Process for Self-Employed
Did you know that if you pay yourself a regular salary, you can avoid supplying full company and individual financials? Lender’s call it ‘Simple Verification’.
This form of income verification can be used where a customer is paying themselves a regular salary from their company or trust for a minimum period of six months, and there is no reliance on additional income from the business to borrow what is required. Most lenders that accept Simple Verification just need 1-2 payslips and a letter from the accountant stating the business is profitable and able to meet its commitments.
Rates Are Still On The Rise
We’re seeing lenders changing their policies and rates on a weekly basis; most notably, 1-3 year fixed rates are on the rise with the cash rate expected to continue to climb. Some lenders are even reducing their 4-5 years fixed rates after some aggressive increases earlier on. Variable rates will continue to increase along with any cash rate hikes, but most economists aren’t expecting more than a couple more cash rate rises – only time will tell.
A Debt Consolidation Success Story
With rates still climbing, and many customers really starting to feel the pinch of higher home loan repayments, and higher living costs and still trying to manage all their other repayments as well – we are seeing more and more clients show signs of repayment stress and unfortunately, I think it’s just the beginning. Here is a real loan success story by one of our lenders:
Scenario
– Refinance and debt consolidation
– Clients were starting to slip on some repayments on a few facilities
– Home loan was in order for now
– LVR (loan to value ratio) 66%
Issues
– Late repayments across the last 12 months of their unsecured debts – 5 out of 6 statements had an overlimit or late fee
– Personal loan had a small arrears balance of $200 showing
– Credit score for both applicants under 200
Solution
– No credit scoring and no repayment history were reviewed
– Assessed under the lender’s new Near Prime policy
– Unsecured debts just need to be up to date at the time of ‘Unconditional Approval’ to qualify. This means, even if the application is submitted and the statements show arrears/late fees/over limit fees, the client just needs to make payments to get them back in order, and show proof of this prior to formal approval and the loan will remain in Near Prime instead of moving to a ‘Specialist’ loan product with higher fees.
These clients still received a competitive rate, no risk fees and were able to amalgamate all their debts into one repayment and start to regain control of their finances in this tough climate.
