CCCFA Explained
If you talked with a bank or mortgage broker recently, you may be heard about CCCFA.The Government has made some changes to the “Credit Contracts and Consumer Finance Act (CCCFA)”. Let’s see what is an impact on bank lending and the property market.
The bill was royal assent on 19 December 2019 (convert to law) and the first change started on 1 May 2020. The initial changes were mainly on the lender side but the main change which impact borrowers was planned for 1 October 2021 which was delayed due to Covid-19 to 1 December 2021. These changes are:
- Requirements to keep records of affordability and suitability assessments, and how fees are calculated
- Providing disclosure to borrowers in languages used in advertising language
- Providing information about disputes resolution schemes and financial mentoring services
- Regulations setting minimum requirements for affordability, suitability, responsible advertising, debt collection disclosure
- Duties on directors and senior managers
What is the main impact:
To keep it simple lender (bank or broker) will investigate further about your income and spending to have a realistic & true financial position (item 1). I can say if every Thursday morning you spend $5 for coffee this will be detected and reduced from your income (think about Gym, Netflix, diner out, retail spending, … )! If you have less servicing (income minus spending) then less borrowing. Less borrowing help to cool down the property market.
What would be next:
You need to clean your bank statement as much as possible and avoid extra spending and maximize your income to help you get the highest mortgage possible. You need to have a plan for your property purchase, I can help you draft a plan for your finance and next buy. You can contact me here.
