Wednesday, October 30, 2019

Mortgage Refinancing: Reality Check

I met today with a "Premier Relationship Manager" at HSBC. We are going ahead with the mortgage refinancing. They will send a valuer to value our house tomorrow...

So, she first checked whether I could service the loan based on the data I submitted. Based on just my salary of AUD 176k per year and our spending and a AUD 500k loan the answer was no. Given my salary is supposedly in the top 5% or higher, our house value is only a bit above the median price for houses here, and lots of people drive luxury cars etc. and we don't, you'd think this wouldn't be a problem. She said our spending was "very high". Either government income data is too low (but the banks ask for tax returns), or people somehow hide spending from the banks (but the banks ask for bank statements), or what? It's hard to reconcile what I see with the data.

Our net worth is in the top 300,000 or so of households and my income in the top 400,000 of taxpayers according to this official data.

By the way, five plus years ago, when we were looking to buy a house, the banks were willing to lend us much more money. Lending standards really have tightened.


Slack Investor said...

Hi Moom

I have also gone into the strange world of bank/broker financing recently. Similar to yourself, I have assets and recently on above average income (but now retired). The response from many banks for a loan of 25% of a future home was perplexingly refused. I had to reduce the amount we spend on travel to make their criteria. It seems that many others are playing the game on their expenses submissions.

First time commenter but have tuned into your great blog for many years.

mOOm said...

Thanks for commenting. I added your blog to the list.