Question, when it comes to the tasks associated with property investment what is the second most tedious to deal with, the first being council consenting?

My guess would be dealing with the paperwork associated with bank loan applications. In recent times banks have dramatically altered the processes associated with lending and approvals. Some of the changes have been driven by the new anti-money laundering initiatives that require rigorous proof of identity and proof of source of funds.

Add to this the compliance paperwork necessary to achieve withdrawal of Kiwisaver funds and applications for home start grants and the process really is exhausting.

Many established investors looking for new lending either for their own portfolios or when assisting children into property are often surprised by the paperwork required and all too often we hear comments like “Why do they want that?” or “My banker knows I can afford this”.

Unfortunately, this laissez-faire attitude just doesn’t serve the applicant well and frustration becomes inevitable as delays mount in gaining approval whilst bankers wait for everything they need to do their jobs.

A recent conversation with a mobile manager confirmed that the vast majority of loan applications submitted by borrowers directly (rather than through brokers) are simply shoddy and incomplete.

❝Banks now will require three months’ personal bank statements and details of personal expenditure to determine serviceability ratios❞

Be Prepared

The income to borrowing ratios, LVR rules and lending restrictions mean that if you want to give yourself the best possible shot at acceptance you really do need todevote time and energy to completing the bank application forms properly.

Banks now require three months’ personal bank statements and details of personal expenditure to determine serviceability ratios. Be careful to ensure the analysis of your personal expenditure is consistent with what is apparent on those bank statements. Make sure you accurately schedule all the APs that are present from your account.

Remember also that banks will require complete disclosure of all elements of your portfolio, this means providing details of properties and mortgages with other banks even if the bank you are working with is not taking these properties as security. In other words, be prepared to disclose everything. Your financial statements of course are key to this because they lay out everything a bank may need in this regard but they don’t provide any analysis of your personal expenditures.

My challenge to you is to become a banker’s dream, maintain a system that can deliver them this information as and when they need it and you will do wonders to your chances of getting fast, efficient approvals.

Mark and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz