Luxury Home Loans

SUCCESS FACTORS

  • We worked hand-in-glove with our client and their accountant to understand a set of complex financials to achieve the strongest servicing position possible
  • We closely managed tax liabilities and a detailed understanding of existing loan commitments to overcome tough credit conditions
  • We clearly articulated our clients response to Covid-19 and resilience during the pandemic by providing interim financials, year-to-date Profit & Loss statements, and detailed accountant’s commentary

THE SITUATION

  • Our client was a large multi-site franchise owner of a member subscription business with heavy capex
  • The business had been impacted by Covid-19 due to mandatory lockdowns in NSW, however overall the franchises had been performing strongly due to growth initiatives and our client’s business stewardship during the period
  • Our client had purchased a luxury property in Northern Sydney, valued at over $6 Million. He had roughly $500K deposit, but required the simultaneous sale of his family home and a cash-out from an investment property to complete the purchase

THE CHALLENGES

  • Initially the client’s loan did not service – partially due to Covid-19 impact, but also because profit had been intentionally deflated for the most recent financial year to manage the client’s tax position
  • We had to juggle multiple applications simultaneously as well as precisely calculate the ‘funds to complete’ to give our client the confidence we could settle the new purchase
  • Generally the financials were very complex across two different entities (one of which was co-owned with a business partner), with many asset finance and equipment loans to factor into servicing. There were also outstanding tax debts we had to manage throughout the application process.
  • To make matters worse, the outgoing lender for our client’s investment property had lost the Certificate of Title in transit from their solicitors to the Mortgage Trustee Company! This caused a lot of stress very close to settlement

THE RESULTS

  • We worked closely with a Private Bank and a major bank’s Broker Channel to source two pre-approvals to de-risk the transaction and secure the best terms possible
  • We held several interviews with our client and his accountant to truly understand the nature of the business to identify:
    • Drivers of recent growth
    • Additional add back items and removal of expenses
    • Loan commitments in the company
    • Responses to Covid-19 and general business resilience through the pandemic
  • This allowed us to demonstrate more servicing income which led to a 30%+ increase in borrowing capacity
  • We managed extremely tough credit conversations:
    • Firstly, to manage credit’s comfort level with outstanding tax debts, and to assist our client with the timely closure of the tax balances prior to formal approval.
    • Secondly, to help credit understand ongoing loan commitments, in particular which were loan repayments for debts on-balance sheet and which were lease or rent expenses for debts off-balance sheet.
  • We delivered a high level of service to our client and his accountant, tightly managing every aspect of the deal, drafting accountants letters and keeping all parties up to date
  • We worked on a daily basis with our BDM and the discharges department of the outgoing lender to replace the lost Certificate of Title and to make sure that the refinance and cash out settled on time
  • Our client was able to settle three transactions in a timely manner:
    1. The sale of his current home;
    2. A refinance and equity release from his investment property; and
    3. The financing and settlement of his dream home.