It was said that many Australians lie and leave out minor or significant details when applying for loans and this has led to a $500 million pool of liar loans. Westpac has introduced a strict regime of loan application review to make sure all new loans really comply with responsible lending standards and other banks are expected to follow suit. Chan & Naylor Tax Accountants in Pymble talk about it in detail.
About 67% owners of 1,000 recently purchased homes said that their loan applications were completely accurate and factual, which means a third of mortgage applications contain inaccurate details such as underdeclared living expenses and debts, overstated income or overvalued existing assets.
Because of a new, more rigid review, borrowers should expect to answer more questions and verify expenses, income and loan commitments. The expense categories that applicants would need to fill out and verify will more than double in number.
Borrowers will even be asked about alcohol and gambling consumption, phone usage, medical and health, groceries, clothing, transport, utilities and property investment costs, among others. They will also be asked about recreation and entertainment expenses, including membership fees and holidays. This could lead to frustration and even a credit crunch that could drop the economy into recession. Nothing’s for sure though, except that it will be more difficult for borrowers to get a loan and the approval process will take a longer time.
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