When your circumstances aren’t black and white, it can take more time, effort and planning to secure a home loan.
Buying a house is a big deal, and probably one of the biggest purchases you’ll ever make. For almost every home buyer, saving for a deposit, finding the home of your dreams in a suburb you want to live in, as well as getting the right loan are all challenging enough. But what if your circumstances need a little more explaining?
Whether you have a poor credit history or you simply haven’t been in your job very long, there’s not much that Aussie brokers haven’t seen before. Because experienced brokers really understand what lenders want, their advice and guidance can be a valuable first step to getting the home and the home loan that are just right for you. No matter how challenging your chances may seem.
Here’s how two Aussie Brokers – with a little patience and care – were able to help valued customers into their dream properties.
Case Study 1
Even with current low interest rates, mortgage lenders are more risk averse than ever. Which means it’s not just a poor credit record, unemployment or a few missed loan repayments that could put your application in doubt. Even if you look like a good bet, lenders can still take some convincing, as Aussie Neutral Bay broker Alex Kardasis found out recently when he tackled the biggest loan of his career.
Alex was approached by a couple from overseas who were looking for a property in Australia. Despite both working for the same multinational for years, the couple had only been working in the Australian office for four months so they had no local employment track record. This was the first challenge since banks look for stability before lending and that generally means six to twelve months in a job.
Although the husband was an Australian citizen, his Dutch wife was only a temporary resident, presenting the second challenge. Different lenders view nonresident borrowers differently, with policies varying from outright refusal, to lending restrictions, including limits on the amount borrowed and the need for additional supporting documentation, to applying special lending parameters with dedicated specialist credit assessment teams.
Finally, as well as no local track record of employment, the third challenge was that they both relied on discretionary bonuses as part of their income. Lenders will assess bonuses as part of a borrowers’ income, provided they can show they’ve been paid regularly. But at the very least this was going to add to the burden of proof they needed to offer a potential lender. It also meant Alex had to make sure the borrowers understood why lenders might be reluctant.
“The first thing I needed to do was convey to the couple the challenges we were facing in finding a lender,” says Alex.
Alex used his skills and knowledge to find the one lender willing to help. Because it was a big loan the lender wanted a 30% deposit, which Alex knew would have been a stretch if the valuation was even a few thousand dollars over expectations. And with so many complexities, the loan couldn’t be approved by a normal credit officer at the bank and had to be referred to the State credit manager.
Lining up the lender and managing the clients’ expectations about the importance of being fully prepared were key to the success of this deal. Even when the wife changed jobs during the process -which would have been a deal breaker says Alex – except her base salary alone in the new job was higher than her base plus bonus in the previous job.
Despite good jobs, good incomes and a decent deposit there were still all the policy challenges from the banks side that needed to be addressed, says Alex, and that meant being prepared.
“This complex situation reinforced how important it is to gather as much documentation to support an application as possible ahead of time,” says Alex. In this case, it was three years of pay slips and proof of bonus payments, as well as an employer’s letter.
Not only did it avoid delay but it established trust, as did open and regular communication with all stakeholders including the agent and the vendor, says Alex. Because of the trust he had established for his clients, the vendor was even willing to take the house off the market while the valuation was complete.
“Despite the lengthy process, the couple were able to purchase the house they had wanted all along,” says Alex. And despite a very complex situation, they were successful thanks to the support and guidance of an experienced Aussie broker.
Case Study 2
There are lots of would-be borrowers who, at an initial glance, can look like a credit nightmare. But with a bit of guidance on how to set the record straight, lenders may be prepared to take a second look. And that can make all the difference, as one borrower found out with the help of Aussie broker Simon Nesbit.
“When I first met the client in 2013, he had considerable financial distress and was considering declaring bankruptcy,” says Simon.
Although his mortgage was small, high personal loan repayments and a poor credit history plus some defaults meant his existing lender wouldn’t refinance.
“I encouraged him to create a plan to get in control of his debts,” says Simon. “He made a commitment to change his lifestyle to suit his new budget and I checked in regularly to make sure he stuck to it,” he says.
Within six months things were looking good enough for Simon to find a local lender willing to consider refinancing, despite his client’s recent credit issues. After 12 months, the borrower was able to consolidate all his debt into a fixed interest mortgage with repayments set at half the amount they’d been on his original loan.
The relationship didn’t end there and a few months later the same borrower came back to Simon for help to find a place interstate for him and his new partner. Simon’s diligence throughout the process and beyond helped him secure a fully assessed pre-approval for the client to avoid unnecessary high loan moving costs, as well as picking up an issue with the property title could have blown the whole deal.
“Our responsibility doesn’t finish with approval,” says Simon. “Errors and delays can have a huge emotional and financial impact at this critical time,” he says, “so our job is to see it through to the end.”
“Understanding not just the what, but also the why is the key to developing long term customer relationships,” he says.
For this borrower, his relationship with an Aussie broker that’s spanned more than three years turned a credit nightmare into the home of his dreams.
Whatever your circumstances an Aussie broker can help; whether it’s understanding the requirements of different lenders, getting to grips with the challenges of an unusual application, or just making sure all the facts are correct. Talk to your local Aussie broker today. You might be surprised how they can help you.
Check out other unusual circumstances faced by potential borrowers: