Eview Group

Thinking of Buying a Property?

Here’s what you need to know about new lending criteria.


Whether you’re buying your first property or it’s been a while since you last made a purchase, recent changes to the Australian lending system might take you by surprise.

This year banks have adopted tougher criteria when it comes to approving a loan and they’re taking a much deeper look into your finances before signing off.

In a nutshell, that means prospective buyers need to hand over more information than ever before and they may need to be more organised before making an offer.

If you’re thinking of buying a property, here’s what you need to know.


Spotlight on the Banks

The changes to lending criteria come in the wake of the Banking Royal Commission, which found banks should be working harder to really understand their client’s financial position before they offer them a loan.

Traditionally, lenders have always looked at four key criteria prior to approving a mortgage: income, living expenses, debts and commitments, and equity position.

While debts and commitments, income, and equity position are pretty easy for the banks to quickly determine, living expenses can be a little harder for them to ascertain.

As a result, they’re now putting living expenses under the microscope and are asking loan applicants a lot more about them.


What Extra Information is Required?

The information now required varies from lender to lender but can often encompass things like three months of bank and credit card statements and a detailed look into your spending habits.

They now then look at exactly what you spend, where, and seek to determine whether it matches up with what you’ve told them in your application and the loan you believe you can afford.

They also look to see whether that spending poses a liability. For example, is there significant money spent on alcohol, at the TAB or on excessive online shopping?

The upshot is, if you’re considering applying for a home loan, you might want to take a good, hard look at your credit record, your spending habits, and your general outgoings well in advance.

Here are our top tips to help the lending process go a little more smoothly, so you can secure that home you love when the time comes.  


Our Top Tips

  •  Take a good hard look at your spending well in advance of applying for a loan (three months or more prior.
  • Rein in any unnecessary expenditure like gym memberships, subscriptions, entertainment expenses and online shopping
  • Get a copy of your credit report to know if there are any hidden issues you weren’t aware of
  • Before starting the property search, talk to your lender or a broker to find out exactly where you stand financially when it comes to applying for a loan, and what you may need to do to improve your chances of quick approval

The Final Word

All signs indicate the property market is currently on the up, making now the time to get your finances in order if you want to get in sooner rather than later.

And while the new lending criteria may come as a surprise to borrowers, it certainly shouldn’t deter them from following their property dreams. Instead, it might just take a little extra diligence and organisation, and there’s no better time to start that process than now.

Looking to buy or sell your property? Why not chat with one of our friendly Eview agents on 1300 438 439 to understand the options available.