Have you heard that there is a Financial Services and Banking Royal Commission going on? We have all seen the news that the banks are getting into a lot of trouble for some pretty bad business practices. There were some inappropriate loans, financial products and fees & charges that have being charged by banks.
‘The Commonwealth Bank has agreed to pay the biggest fine in Australian corporate history for breaches of anti-money laundering and counter-terrorism financing laws that resulted in millions of dollars flowing through to drug importers. CBA will pay $700 million plus legal costs after federal financial intelligence agency AUSTRAC last year accused the bank of serious and systemic failures to report suspicious deposits, transfers and accounts.’ The ABC reports.
So what does this all mean for you and me? How will the Royal Commission affect me? Well at the coal face we are already seeing changes, credit is getting a lot tighter and servicing is getting a lot harder. This means they are investigating everything, looking at your transaction statements and payslips with a microscope, especially if you are looking to invest. We are currently seeing loans that only 6 months ago we were getting approved are now getting declined. These are good clients but hitting brick walls.
So the top 7 things that are going to affect you are;
1. Tighter servicing conditions the banks are placing on your loan
2. More paperwork being asked by the banks and full disclosure of all your assets and liabilities, companies trusts and Self-Managed Super Funds
3. Longer time frames to get your approved finance
4. Reduced loan sizes
5. Larger deposits needed
6. Evidence of savings
7. A strategy for the property purchase if investment i.e. What you will be doing with the property? Keeping, selling and flicking, are you at retirement age how will the repayments get made etc.
So let’s all look out for the next few months there is going to be some changes, so buckle up and get ready for the ride. Using a broker for your finance is going to be a lifesaver as they will know where to place your application and all the required documents – and remember please disclose all your details to the broker as missing some of these can be detrimental to you getting your loan approved.
If you are looking to invest any time soon then give us a bell here at Blue Wave, we can crunch the numbers for you and see if and how much you can borrow – don’t let this little hiccup stop you from reaching your wealth creation goals – where there is a will – there is a way!