You have been warned

If you think loan approvals are sluggish now, get ready for them to become even more tortuous – and invasive.

The Ministry of Commerce and Consumer Affairs has released its new guidance on loan approval processes under the Responsible Lending Code. We’ve completed the training. Here’s what you can look forward to.

If you want to borrow for pretty much anything – whether it’s a flat-screen TV at Noel Leeming or a million-dollar house – you will now have to provide even more copious details of your finances. Bank and credit card statements will be requested. Lenders will be required to scrutinise (yes, scrutinise!) them to see whether you’re capable of managing money.

If they can see you spent $100 on Lotto tickets last month, or made regular purchases at Liquorland, that could be a red flag. As lenders or financial advisers, we will be required to note these peccadillos and the banks can perhaps decline your application if they think you have addiction issues.

Personally, I find it horribly invasive and oppressive. However, this is the new reality – so get used to it. From now on, loans will not be rubberstamped in double-quick time.

So what should you do if you’re thinking of applying for finance?

One option might be to take up an interest-free offer now, before the hammer comes down. More seriously, you should take a close look at your spending months before you let any lender go through your bank statements with a fine-toothed comb. Some people may need to adjust and tidy up spending habits if everything goes through their debit or credit card. Personally, it reminds me of why I prefer cold hard cash.

As always, we’re here to support you. We can help you start prepping your finances months before you put in an offer on a property. Better still, we can work with you to set up a budgeting system that puts you on the road to being a debt-free property owner.

There’s no cost. All you have to do is ask.

We’re always here to help you with home loans and all your personal finance questions.