Here at Perspective, we don’t usually hand over the reins to a single author, but we felt Andrew’s first step to home ownership would be better off coming from the horse’s mouth. You see, with a bit of prodding, Andrew visited a mortgage broker last week. And this was his experience:
My name’s Andrew. I’m 25 years old, married to my high school sweetheart and finally finding my feet in the full-time workforce, having dabbled in numerous ventures both here and overseas since my early 20s.
I’ll be straight up with you…I’m not really a “money” guy. In fact, my money-managing is generally so poor that it’s not uncommon for me to stray dangerously close to an aneurysm when paying by card, so frequent are the “Declined – see bank issuer” messages. Continue reading
“Seriously hard, looking for a loan is.” Such was the advice our miniature green friend, Master Yoda, gave a young Luke Skywalker, who was trawling through a myriad of Tatooine investment property options. For Skywalker, a freelance Jedi apprentice, a regular fortnightly pay day is in a proverbial galaxy, far, far away, and it turns out that many banks just won’t give him a look in as far as a home loan application goes.
Getting a loan is harder, still, when, like Skywalker, your income is neither steady nor regular, as is the experience of many sole traders. Feeling the pinch are freelancers, artists, self-starting entrepreneurs and anyone game enough to go out on their own and who hasn’t had the terrible misfortune of inheriting a squillion from dear old Great-Aunty Doris.
That’s not to say it’s impossible, but it means jumping through a lot more hoops than your everyday wage slave to persuade a lender to come to the party.
Banks, too, face many hurdles they have to clear to satisfy financial regulators like the Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA). To avoid a repeat of the US sub-prime mortgage market debacle which ultimately led to the Global Financial Crisis of 2008, where hundreds of thousands of people defaulted on loans they couldn’t afford from banks who doled out loans hand over fist, Australia adopted a strict regulatory environment that has made banks highly wary of who they’ll fund.
The regime puts the onus on banks and other lending institutions to ensure that a borrower is able to service a loan – or face the lawmakers’ wrath.