Seems a bit unconventional, doesn’t it? Christmas, typically a time of extravagance! However, for all my valued clients considering borrowing in early 2019, my sincerest Modest Christmas Wishes are extended to you. Why this shift? Well, because in the realm of borrowing, an excessively festive Christmas could potentially dampen your prospects for securing funds in the upcoming year.
Let me explainā¦
As you will no doubt have heard, banks lending criteria has continued to tighten through 2018. It is estimated that most borrowers can now only borrow between 70-80% of the amount they could borrow 2 years ago.
One of the ways lenders have tightened up is by paying closer attention to borrowers actual living expenses rather than relying on modeled living expense figures.
Many lenders now even require borrowers to provide 3 months statements for transaction accounts so that they can verify spending against declared living expenses.
So right about now you can see where I am headedā¦
Borrowers that spend too much over Christmas may find their borrowing capacity diminish as lenders assess that the borrowers living expenses are higher than both the figures declared AND the usual spending pattern of the client.
So spending in December will impact your borrowing capacity through till the end of March. Just keep that in mind if you are looking to borrow funds in early 2019. However, I hope you won’t mind me suggesting some modest Christmas wishes to ensure a joyful holiday without straining your finances too much. Sorry to be a killjoy!
