Skip to main content

Type of Client: Self-Employed Business Owner

Type of Loan: Land Loan and Construction Loan

Success Factors

A high performing accountant who was willing to finalise and lodge the client’s tax returns ahead of time.

Applying fact-based reasons to respond to key servicing issues raised by the credit team.
Thoroughly understanding niche bank policies for self-employed applicants. Share of rental income and trust distributions that relate to the marital settlement were added back for servicing.

Presenting the client in the most favourable way. The client has a longstanding business for over 18 years, with an excellent working experience in his career history.

Making a strong case for seeking 90% LVR. Marital separation was the main reason for a low deposit, while there is strong evidence to support the client’s ability to repay the loan.

Situation

Our client is the owner of a software company which develops software for video games and casino gaming machines.

He recently had a divorce, and has 2 dependent children, aged 12 and 16.

When the client contacted us, he had already exchanged contracts on a property.

He required a loan for land and construction totalling $1.7M. Due solely to the marital separation, he only had a small deposit, thus requiring a loan approval at LVR 90%, with Lenders Mortgage Insurance.

His income also includes foreign income from an unencumbered investment property outside of Australia ($200/wk).

In terms of debt, the client has existing obligations from commercial property, chattel mortgage and credit card debts.

Disruptions in the business due to the client’s marital separation led to the most recent year’s results being much stronger than the previous year’s.

Servicing would rely only on the most recent year’s income. However, the most recent year tax return, though finalised, has not been lodged.

Challenges

There were a number of challenges, especially on servicing, that had to be overcome for the scenario to be accepted.

In seeking a loan term of 30 years, the client would be carrying a loan well into his retirement age. To mitigate that, there had to be an ‘exit strategy’ for the loan term, which was sell the overseas investment property and his business.

On reviewing the performance of his business, income in the previous year suffered dramatically as a result of disruptions caused by the marital separation. During the divorce process, the client was often distracted from the business, and didn’t invest much time on the key clients.

As his broker, we had to devise a plan to present his trading performance to the bank. In explaining the previous year’s results in the application, we pointed to a drop in revenue solely due to the client’s marital separation, rather than costs blowing out.

Given a much better trading year most recently, servicing would rely on financials for the most recent year. On this, we took the initiative to work closely with the client’s accountant for the lodgement of the year’s tax returns.

During the application process, we also worked closely with the bank’s credit team, while constantly communicating with the client, to solve servicing issues raised one after another. While the credit team kept the dialogue open, we were able to present fact-based reasonings to each servicing issue challenged.

Result

There were two important levers in the servicing model which got the deal over the line:

  • Rental income changes – as part of the marital settlement, the overseas commercial property was transferred to the client entirely. As a result, the client would be receiving 100% rental income.
  • Trust distribution changes – one of the outcomes of the marital separation settlement, is that the client became sole director and shareholder of the company, and hence would be receiving the full trust profit for servicing.
  • Given the disruptions in the client’s business, his age and the size of the loan he was after, cracking the servicing model for credit assessors to approve the loan was not a straightforward task.
  • The client was seeking a loan at 90% LVR, he had already exchanged contracts on a property and had to settle within 6 weeks.
  • We worked closely with the two most important stakeholders in the transaction, firstly with the accountant to prepare the submission package, and then the credit team to find solutions to servicing.
  • The loan finally was approved, and settled on time.
  • The significance of the new home was to allow the client to re-boot after a very disruptive episode. We are also glad to be able to help the client be back on his feet and striving again.
5
Based on 192 reviews
powered by Google
  • I’ve known Tommy Lim of SF Capital for many years and I’m so impressed with his service and knowledge of the finance Industry. Highly recommended.

    Bruce Whall

    Tommy and the team were awesome throughout the process of getting a business loan; I found Tommy understood the nuances of small businesses and how to extract the maximum loans from the numbers. Even though NAB threw a last minute curveball, Tommy diligently worked through the details and got it... read more

    Nav Lal

    Tommy, Priscilla and Alexey (and the lovely crew behind the scenes) are true professionals. They were collectively a bright spark in a pretty rough and rapid first home buying journey. We really, truly appreciated their kindness and expertise in guiding us to make strong decisions that we feel really good about and... read more

    Kanil Fernando

    It is now some 4-5 years since SF Capital have been taking care of my mortgage needs. We have worked on multiple mortgages, both personal and investment, in that time. They are a skilled and professional team. Excellent communication. Priscilla and Alexey have been fantastic to work with and I... read more

    Nirosha Paramanathan
  • Super professional and a safe pair of hands to get you the best loan for your needs. Six star experience with Tommy and the team at SF Capital! Highly recommend for both simple and more complex borrowers.

    Godfrey

    I had an exceptional experience working with SF Capital! From start to finish, Tommy made the entire mortgage process straightforward, transparent, and stress-free. Tommy took the time to thoroughly understand my financial needs and goals, offering expert advice and answering all my questions with patience and clarity. The level of... read more

    Neil Marshall

    Tommy is the ultimate professional. Very well versed in complex lending options and has the ability to speak with a lot of clarity on them. He is also a diligent and communication focussed professional and can endorse him to meet your lending needs!

    Daniel Bligh

    Priscilla and the SF capital team have been amazing! Never once was I made to feel like I asked too many questions and every time I had a question, I always felt i was in the best hands possible! We refinanced at a significantly better rate and realised we were... read more

    Tara H
  • The team at SF Capital helped me navigate through what was a terrible experience with another broker firm. What was initially a very difficult experience getting a home loan as a self employed business owner, became much easier with the team at SF Capital taking the helm! They turned everything... read more

    phil mason

    Such good service from start to finish! Highly recommend Tommy and his team!

    Mitchell Kim

    Excellent process and care by the team at SF capital making somewhat cumbersome paperwork and detail straight forward and simple to digest. Also quite proactive in their approach to ensure the best rates and changes are applied to best suited circumstances. Great work all round and couldn't recommend more

    Walid Yassine

    I can totally see why SF Capital receive five stars and quite frankly, if I could give more stars, then I would. My niece used them for purchasing her property and had no hesitation in recommending their service to me. And I can see why. Right from the... read more

    media thumbnail 0
    Linda Robson
  • The Team went above and beyond for us. They helped explain things and talked us through every step of the way. I would highly recommend them to everyone and would use them again in future. Thanks so much SF Capital . Laura and Phil Sharpe

    Laura Sharpe
×