While we can't yet travel overseas, REA Group's new financial passport could help home buyers understand their borrowing capacity.
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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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
Lender | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Variable | More details | ||||||||||||
| FEATUREDUNLIMITED REDRAWS | Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
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| Variable | More details | ||||||||||||
| FEATUREDREFINANCE ONLY | Variable Rate Home Loan – Refinance Only
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Variable Rate Home Loan – Refinance Only
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| Variable | More details | ||||||||||||
| FEATUREDAN EASY DIGITAL APPLICATION | Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
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Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
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| Variable | More details | ||||||||||||
| NO ONGOING FEES | Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%
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Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%
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- Fast turnaround times, can meet 30-day settlement
- For purchase and refinance, min 20% deposit
- No ongoing or monthly fees, add offset for 0.10%
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 7, 2022. View disclaimer.
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