As housing affordability issues rise and APRA's new rule potentially reduces the average Joe's borrowing power, it's important that first home buyers and home owners alike wrap their heads around how much they can actually borrow.
Recently, REA Group announced its partnership with open banking fintech Frollo to provide its users the ability to generate a 'Financial Passport', to help people understand their borrowing power.
Aiming to provide users with financial insight early on in the home buying process, this tool allows buyers to get a 'real-time', 'accurate' and 'complete' grasp on their finances.
This free tool allows users to fully understand their income and expenses, and is set to make the home loan application process easier.
How does the Financial Passport work?
Frollo's Financial Passport is powered by open banking, and it works in three easy steps:
- The user connects their accounts using open banking or screen scraping;
- Frollo's AI tool collects and categorises data based on lending criteria;
- The user receives an 'in depth' financial profile detailing income, expenses, assets, and liabilities.
Once the report has been generated, it can be downloaded as a PDF.
Source: Frollo
Why is a Financial Passport useful?
realestate.com.au is Australia's largest property finding platform, and the Financial Passport tool will allow buyers to understand their borrowing capacity early on in the buying journey.
This way, they can specifically search for properties within an affordable price range by knowing exactly where they stand financially.
Eloise Wall, REA Group General Manager, Digital Product & Innovation, said integrating the financial passport allows REA Group to continue their mission of changing how people experience property.
"Tools like Frollo’s financial passport can help consumers understand their income and expenses and we’re confident that in the near future, these types of innovative open banking experiences will make the home loan application process easier," Ms Wall told Savings.com.au.
Ms Wall also said that it's important for first home buyers to have a solid grasp on their spending patterns and financial position before applying for a home loan.
"Lenders will use this information to determine their borrowing power," she said.
"Frollo’s Financial Passport gives buyers an easy way to access a complete and accurate picture of their finances."
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