This lockdown has been easier for some of us to adjust to as we know what to expect, and that same knowledge of what is ahead is causing others distress. There is still uncertainty about how long we will be in Level 4 lockdown and how quickly we can come out of it. Even with no confirmed cases in the South Island it’ll be quite a process to get us safely back to Level 1. We hope you are going ok – emotionally, physically, financially.
All we can do is minimise our contact with others, keep scanning in, and just do our part: look after ourselves and those in our bubble, then extend our communications out to others that are in small bubbles and or who we know may be struggling.
While in Lockdown many of the providers we work with have been taking this opportunity to do some additional training on the upcoming changes to the CCCFA. The changes to the rules on responsible lending mean that the way that we have been reviewing and assessing your expenses will be changing. Not only will we need copies of statements, we will also need to go through your transactions to categorise and confirm all spending. Gone are the days of the banks just using a percentage or a set figure for expenses for a household of your type.
Gathering all the information required for getting lending is painful for many clients and to need to gather more information is just going to add to that pain. When Building on Basics goes through the information clients provide us we often find ways that our clients can improve their finances, without necessarily reducing their lifestyle. Our no judgement approach can often improve your financial situation before we even get to the application stage.
Worth noting, this additional level of scrutiny is also going to be required if you go into the banks to discuss your requirements. They are following the same rules around responsible lending that we are required to follow.
The rule changes are all about helping to prevent people from getting into hardship situations. This is critical as we have been in a low interest environment with property prices increasing, which has enabled people to have large loans. The low interest rates have meant that these loans are affordable – but even though the bank “stress tested” the lending when you applied, the reality is that your surplus funds may have been sucked up into your day to day spending rather than being used to either reduce your debt or increase your savings.
To have a chat about how the changes ahead may affect you please send us an email or book at appointment at the Calendly link at the bottom of the page. Everyone’s situation is different, and we are here to help you make the most of your finances.