Type of Client: PAYG, Medical Professional
Type of Loan: Investment Property Loan
Success Factors
Client’s goals and objectives had changed multiple times, but her information was secured and tracked through our broker CRM system which meant we understood her financial position and the solution offered was able to be adapted to the constant changes Having the experience and presenting all solutions available to manage a 10% shortfall in the valuation.
Specific bank knowledge of process and foresight to be able to manage a settlement process smoothly.
Situation
The client is an experienced Ophthalmologist based in NSW and had reached out to us as she had wanted to purchase an investment property due to the advice of her financial planner.
Upon receiving all her information and presenting our detailed assessment to her, a new career opportunity was put forth to her which meant this new potential purchase was put on hold. Even though she did not continue with the purchase, this information was extremely helpful for her to plan for her future.
Within 6 months, her situation changed again. She was now seeking her forever home in another state, in order to be close with her family. Therefore we reinstated our process and requested some additional documentation to re-assess her current situation.
Challenges
There were a few challenges to resolve in this scenario.
- From the time between our final assessment and the loan approval, the client had already relocated to another state.
- Our client did not have a 20% deposit and even though she owned an almost unencumbered property, she was capped by her borrowing capacity.
- Valuation had returned 10% lower than what she will be purchasing the property for and even though she had the opportunity to rescind the contract of sale, she was committed to make this property hers.
- The vendor offered a rebate on the purchase, however a vendor rebate does not reduce the purchase price on the contract – it is a rebate given at settlement to reduce funds required.
Result
From our final assessment we had already known the client quite well and understood what we had needed to solve in order for her to be able to purchase a property she currently had her eye on. In determining the lender we chose, we had to consider the following factors.
Lower than 20% deposit – the recommended approach in this instance was to look for a lender that would allow a medical specialist to apply for a 90% LVR loan, with lenders mortgage insurance (LMI) waived.
The property she was interested in was a newly completed apartment – from our experience, we had the foresight to have a plan B in the event the valuation came short and still gave us sufficient time to settle without penalty.
We came to the lender with which our client already had a loan for her property for the reasons presented above. Our submission to the bank was crucial as it was important to present her ability to continue an income in another state. From our vast experience, we knew how to package up the client’s position and easily present this to the bank.
What we had to resolve was the lender’s inability to accept a vendor’s rebate as funds to complete. Also knowing the client already had a small shortfall we had to manage the deposit with an unconditional and non-repayable gift from her mother.
The last hurdle was the valuation which had come back even lower than expected. This was overcome as we understood the bank’s policy and were able to apply for a higher than 90% LVR but maintain the same loan amount. The client thus avoided paying LMI.
