A Responsible Lending Declaration that Mortgage Advisers are sometimes required to complete and sign, asks a number of questions around client banking conduct, nature of loan requested, any bank assistance required in decision making - and whether or not our client is anticipating any changes in their life that would make loan repayment harder.
Clearly after spending a significant mount of time with our client discussing the details of the loan, loan affordability and protection, and steps in the loan application process, the required declaration seems pointless and time consuming!
So, is it timely to consider the advice process we offer - as opposed to the relentless march towards digital loan processing we now see with banks and other lenders?
Whilst we do everything in our power to ensure that our client can afford the mortgage payments, we are also aware that spending patterns can change for the better when younger people are faced with regular mortgage payments. In later life people often buy a smaller home to clear mortgage debt , and sometimes properties are sold simply because the mortgage trip has become too difficult!
So, will a computer algorithm know that people often reduce their spending when they get a mortgage, or they can "downsize" to reduce debt or even sell a property if things get tough?
Clearly the answer to the above question is "no!" and so the advice process still has a large part to play in helping people into homes!
Call us at Thompson McNeill for advice - (03) 281 8605 or email us at