First Home Buyers And Refinances

First Home Buyers

You may be experiencing an increase in First Home Buyer (FHB) enquiries in response to recent changes by Federal and State governments to FHOG incentives. FHB’s have traditionally lower approval rates than other segments. By using some ideas & processes below and presenting information requested, the quicker a FHB application can be decisioned, and the higher the chance that we will eliminate leakage. This is especially relevant for higher risk applications that require a referral to Credit. Generally this would include high LVR's where LMI is required.

No Genuine Savings

Ensure you understand the source of deposit to be provided in all instances. For purchases where genuine savings aren’t held, we need to ensure the customer has the intent & ability to meet existing & ongoing commitments. If this is not evident via asset accumulation (including existing savings history), make further enquiry at interview (eg can they provide current rental outgoing over sustained period, or payment history of other debts? Are they a young professional recently out of university?).

Application Fails Score

This is a strong predictor of credit worthiness Review aspects including asset accumulation & type, level of existing debt, type of debt, employment history and stability of residence. Check the bureau file to view the history of other finance enquiries. This information will assist in developing an understanding of the customer’s financial background.

Other points to note – referrals to Credit

Refinances with “Cash-Out”

Ensure the cash-out purpose is understood. In marginal applications, look for signs that funds may be required as a stop-gap to cover ongoing expenses. This is typical in applications where cash-out is minimal when compared to total facility sought. An alternative for marginal cases may be to consider a re-finance only until the customer develops a stronger relationship with the bank.

Statement History for Refinances

Statements provide a useful history of past behaviour and are a good predictor of the future. Clarify reasons for any anomalies including, increasing loan balances, dishonours or late payment fees. This may be an indication that the customer/s are having difficulty in meeting current commitments. Where an application is from an existing customer, previous history with the bank provides a great insight.