Uber Eats, Afterpay, and Netflix accounts could hinder your home loan application

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Westpac, through Lane’s broker, rejected her claim after finding out she had an unpaid Afterpay balance.

“Our customers have different lifestyles and habits, so we educate ourselves on income and expenses on a case-by-case basis as part of our responsible lending obligations,” said a spokesperson for Westpac. “Expenditure after payment is a liability that should be included as part of our larger surveys of income and current expenses. “

Verifying accounts like Afterpay is especially difficult for banks because they don’t issue statements.

More detailed analysis of applications

The experience of obtaining a home loan has become increasingly difficult in light of the fallout from the Royal Banking Commission as banks now go through every home loan application with a fine-tooth comb.

Lauren Lane first saw her mortgage application rejected by her bank. TREVOR COLLENS

Banks are scrutinizing spending much more carefully as they analyze credit card and transaction account statements following responsible lending violations exposed by the commission, and as regulators step up spending verification.

What banks are looking for are “recurring” transactions regardless of size or nature, mortgage brokers say.

When Emanuel started his loan application in April this year, his mortgage broker reported his regular Uber Eats and Uber Ride spending on his credit card statement asking, “Are these your base? “

The broker also checked his credit card and bank statements for “regular discretionary spending” such as gym memberships, Netflix memberships and even doctor’s appointments as well as private health subscriptions. .

Ms Lane was also asked to repay her car loan before re-applying for a home loan.

“I had no idea these things were affecting my candidacy,” she said. “They saw these accounts as a liability.”

“But I made it a goal to reimburse these expenses and cut back on going out and socializing. I found different ways to have fun, instead of going shopping, I would go for a walk with it. friends, I also started shopping at Kmart.

“I think it’s good that the banks are taking these precautions.”

“The banks will extract your whole story”

A few months ago Ms Lane returned to the same broker and this time successfully secured a loan to purchase a new three bedroom house in Piara Waters, south of Perth CBD, developed by Gemmill Homes.

She got a loan of $ 345,000 under the Washington State government’s Keystart mortgage initiative, which she pays off comfortably each month.

Ms Lane’s home builder, Gemmill Homes, said he’s seen a new kind of expense review that will “blow your mind”.

“I have a young man who was looking to build a house – he used to rent a room from a landlord. The landlord borrowed money from him which was paid back but they asked him if they were a couple!” said managing director Craig Gemmill.

“It then fell to the young man to prove that the payment was unique.

“With full credit reports, banks will pull all of your history. “

He said it was imperative for homebuyers to understand their credit history through credit reference agencies such as Veda before attempting any claims. “If you have Tabcorp or Dan Murphy accounts start thinking about shutting them down,” he said.

While banks don’t provide specific items that would “fail” a home loan, mortgage aggregator and broker Finsure says they look for “recurring” expenses regardless of the amount. Each application is evaluated on its merit.

‘Expenses menu’

The Commonwealth Bank of Australia provided a more in-depth look at the “groups of items” it examines, including child and pet expenses, clothing and personal care costs, telephone bills and other communications and education, insurance and medical expenses.

Gym memberships are certainly factored in, as are expenses for vacations, recreation, cars and general entertainment, a spokesperson said.

Westpac said it has updated its credit policies to better examine customers’ “living expenses and commitments” and has increased the number of expense review categories from six to 13.

“We recognize that it can sometimes be difficult for clients to provide a complete picture of their spend and improving our expense categories means that our staff and brokers have the ability to prompt clients to remind them of expenses. particular things they may have forgotten, for example, pet insurance, gym membership fees and media streaming service costs, ”a spokesperson said.

The National Australia Bank did not provide an “expense menu,” but said it continually reviews its policies to ensure customers are able to repay their loans.

An ANZ spokesperson said the bank was looking for “spreads” with no fixed dollar amount. “It’s a complex area and we’re looking for more granularity,” he said.

There is, however, a growing need for banks and brokers to determine the exact criteria for evaluating mortgage applications to reduce confusion for home buyers, According to Finsure CEO John Kolenda. Generational shifts now see Uber Eats as a staple, not a discretionary expense.

“The real question is what is discretionary? It has to be qualified,” he said.

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