The female applicant was a temporary full-time public school teacher, while the male applicant was a full-time business analyst earning PAYG income.
The clients were looking to start their first home by getting a house and land package in North Western Sydney.
They did not have a lot of savings for their purchase (<$20K). They wanted to use equity from their parents’ home towards a construction loan pre-approval.
Although the male applicant was receiving regular quarterly bonuses, one quarterly bonus was missed due to the impact of Covid-19.
The parents’ home was still mortgaged with a loan outstanding. The valuation for the home came in low and therefore only limited equity was available.
The clients also had to make up for a deposit shortfall for completion.
We went in search of lenders that provide a family guarantee with a second mortgage and require minimal financial information on the guarantors.
First of all, we went in search for suitable lenders by doing a policy check across the market at the time. Once we identified St George as the possible lender, we ran scenario testing with the BDM.
At the same time, we ordered multiple valuations for the parents’ home in order to secure the maximum valuation possible.
We then conducted guarantor interviews and confirmed the parents understood the commitment of providing a guarantee.
The parents were still working full time and had the ability to repay the limited guarantee if required although their income was not required to be included for servicing.
We secured a gift letter from the parents for the remaining deposit required.
The clients were also able to benefit from the NSW First Home Buyer Assistance Scheme to have their stamp duty reduced.
The end result was a $849.5K (94.4% LVR) construction loan approved with a family guarantee.