Page 29 - Smart Money

Smart Money

Another thing to be aware of is that mortgage insurers talk to each other.
For example, say you go direct to a lender and are declined by their
mortgage insurers due to your credit score. If you then go to another
lender, even if they use a different mortgage insurer, the new bank is
going to know that the other bank declined you, because they do talk to
each other, and it will show as a credit enquiry on your credit report.

Banks either self-insure, which means they have their own sign-off
for mortgage insurance, or they have an agreement with either QBE
Insurance or Genworth to underwrite the loan. What does this mean?
The bank might approve the loan, but the mortgage insurer might not
approve your application. It is like the insurance policy on your car. The
insurer is taking on your perceived risk of having a claim depending on
your driving history; it is the same with Lender’s Mortgage Insurer. The
bank has insurance on your debt; the mortgage insurer has the final say
on whether or not you get the loan, because they are the ones insuring
it. Mortgage insurance is required when you don’t have a 20% deposit.
If you do have a 20% deposit and you’ve got bad debt, then you might
still have a chance of getting the loan. As soon as you don’t have the 20%
deposit, you fall into mortgage insurance territory, and you’ve got less
chance of getting the mortgage insurers to sign off on your application. If
you’re application is not signed off, you don’t get the loan, or the house.

Many people still think there are 100% home loans, but they
don’t exist anymore. You have to have money to put towards the

purchase of a house. What used to happen five or ten years ago
in the mortgage industry, doesn’t happen now. Things have
changed.

Bad advice

A lot of parents send their children to the bank they have been with
for years, and that bad advice may result in getting declined because
your personal situation does not fit into the bank’s assessment policy.
Just because your parents got a loan from a particular bank 20 years ago
doesn’t mean that bank is going to give you a loan. It is no longer the