Living expenses

Hi guys, I’ve applied for a top up on an existing Bank of Melbourne IP loan, normally I use a broker but it’s a lot of work for them for a small amount so I’m going it alone this time.

I submitted the app online and had an initial phone convo with the lending manager today, he said servicing was tight but we’re ok, and he’s happy with purpose and valuation. He’s sent through a list of docs he needs, and he wants 3 months of credit card statements and bank statements, plus we have to fill out a monthly expense spreadsheet.

My nervousness is that I reckon our monthly spend is a fair way above HEM - not so much in the way of luxuries but just general family living costs, and if they’re using HEM for the initial servicing calc we could be cooked.
Looking at what the broker submitted as living expenses for the initial loan setup last year based on his review of our statements, I think he may have accidentally on purpose understated some expenses so that it landed a little bit above HEM, ie groceries at $180/wk instead of $300.
Just wondering what people’s recent experience with BoM/Westpac is here, are they being forensic with statements and should I pull the pin now rather than risk a decline, or run the gauntlet and see what happens?

 

If you put that information in their hands they can’t not look at it The Royal Commission made a big deal of this.. and ASIC are all over it right now with lenders as well.
Are your last 3 months spending patterns typical or atypical? If they are typical and you can’t offer any reason to the bank about why they should ignore them or make exceptions for them as one offs , you are probably better off going to a lender where statements aren’t requested / required ....

 

Perhaps send the CC statements to your banker and put a detailed explanation of why your expenses are actually lower than whats actually been happening on the recent activity (i.e. one off expenses, etc). Actual 3 monthly statements often show seasonal type purchasing activity that can bring up expenses (e.g. EOFY sales, etc).

I wouldn't bother pulling the pin on an application if its already in submission.

Usually lenders aren't declining it directly of CC statements being over alone (at least, not many lenders), they'll just want some more detail around it. Some are more forensic than others here.

 

You're already 90% of the way there, you've run the gauntlet so may as well ride it out and see what they say, the inquiry is most likely already on your credit file.

 

....now you know why this was a bad idea. I'm sure that a good broker wont mind helping you out even if it is a lot of work because you won't get in this mess.

 

But surely you were aware of this when you reviewed and signed official paperwork?

I think that the banking enquiry uncovered a lot of dodgy practices on applications, which is why many lenders will now require actual statements to confirm your declared household expenses.
Marg

 

Continue with the application - if the assessor comes back with questions just be truthful. If some of the expenses are once off - or are discretionary/can be stopped/reduced going forward - let them know.

Cheers

Jamie

 

Thanks everyone for your advice, some great guidance which is much appreciated. I'll keep going and see where we end up. If it works out I'll post back and if it doesn't you'll probably not hear from me haha.

No I mustn't have reviewed it closely enough in hindsight. He was quite particular about some expenses like school fees, daycare and kinder, and they were all spot on in the application.

Yep fair calls, there's a few reasons I've done it this way but you're both right, agreed!