One of the most important sector of finance in the Australia is Mortgage. This industry is vital aspect of the financial sector. Mostly, banks, pension funds, mortgage concerns, credit unions, insurance companies and societies provide loans. Generally, two types of mortgages are available, when it comes to rates, i.e. variable rate (where rate differs at the choice of the loan provider) and standard rate (where the loan is provided at a particular standard rate).
However, now, there would be certain alterations in applications of mortgage and commands over mortgage accounts, which will be noticed by the lenders and customers, within a few months. Loan experts are advising borrowers to pay their debts and make a reduction in expenses, before applying for a loan.
Key points to keep in mind
- More comprehensive and detailed procedures for providing advice to borrowers.
- Organizations lending the loans would inquire in detail and this would take a long time. They have to go throughout a new assessment and advise process.
- People who intend to make alterations in current mortgages will also suffer.
- Process will also get changed, in case of re-mortgage.
- The new regulations will support in future affordability of loans. The Interest rate will be applied by the mortgage lenders for ensuring that mortgage should pass the necessary affordability requirements.
- Retirement should also be kept in mind by the lenders, while assessing affordability.
- Lenders need to keep a check on the expenditure of the borrower, credit card, normal expenses and other mortgage repayments. Even borrowers need to give the evidence of their normal expenses and they also need to provide proof that they are capable of paying off, the loan .
Awareness after alterations
To make the people aware of these changes, mortgage councils provide advice so that people get knowledge which will make them ready to adapt the changes. Few mortgage lenders have accepted these rules in advance and announced their lending criteria of MMR. Now, the new rules of child care cost also need to be kept in mind. They were not considered by some lenders before, but now, it has proved to be beneficial for people having children.
People who enjoy a good financial condition and have a fine credit record and who are not burdened with bills and commitments should also be aware of these rules.