"Any idea that someone has a gambling habit is a red flag to a lender."
Gambling is the latest target of banks in the new world of mortgage lending, with many lenders now questioning betting habits great and small.
Mortgage brokers are warning prospective home buyers who gamble to rethink their habits or risk being unable to borrow from most lenders.
The increased scrutiny even extends to large cash withdrawals, which some lenders may consider an attempt to hide gambling habits.
Any idea that someone has a gambling habit is a red flag to a lender.
We’ve had a couple of clients who’ve had a direct impact on their finance applications because of their gambling.
House hunters turning to cash-based wagers to avoid gambling transactions appearing on bank statements would still have to explain big ATM withdrawals, particularly in or near gambling establishments.
Banks only have a certain amount of money they can lend,” he said. “If a credit officer saw a regular expense for a gym or a regular expense for gambling, I know which application would be more likely to be approved.”
Gambling had always been “the dirty word in borrowing money” but with banks looking back even further into borrowers’ spending habits, anyone looking to clean up their habit needed to start now.
They’ve got to understand the rules of the game if they want to buy a property,” he said. “The golden rule in this is it’s their gold and their rules.”
An applicant earning the average income of $82,436 who bet $50 a week would reduce their borrowing capacity by almost $32,000, while someone with a $200 per week habit would reduce their borrowing capacity by $127,000. And that’s assuming they can even get a loan.
People looking to borrow more than 80 per cent of value of the property were in the “danger zone”, because buyers borrowing with high loan-to-value ratios would need lender’s mortgage insurance, and insurers steered clear of gamblers.
Gamblers needed to change their habits at least three months out, if not longer, to prove they could be trusted.