Pharmacy Owner’s Construction Loan


  • Applying the policy exception to be able to apportion the client’s business loans to the extent of his share of ownership only
  • Running analyses on the client’s financial statements across multiple entities, including an understanding of government provided support
  • Deriving self-employed income from multiple entities and using the latest year of income which when annualised exceeded that of the previous years.


  • Our client is a pharmacist, pharmacy and medical centre part owner.
  • When he reached out to us, he needed to conduct major renovations on his investment property that would later become his home. A construction loan was required given the renovations included structural works
  • The businesses are in a regional area and during FY20 they encountered a reduction in sales due to the impact of Covid
  • There are also business loans owing by the businesses, with large repayment outlays
  • The client has got married recently and just returned from his honeymoon trip.


  • The financial performance in FY20 was impacted as a result of Covid. Therefore, we would need to provide evidence the business has now recovered and is trading as well or better than FY19, excluding any government support such as JobKeeper and Cashflow boost
  • Although the client was only a 50% owner, some lenders would include 100% of the business loan repayments which would have reduced his borrowing capacity to zero
  • The property on which the renovations are taking place was settled just over a year ago with lenders mortgage insurance (LMI) of $12,000  paid. The client would have to pay this again if the loan was to be refinanced to another lender
  • When a construction loan is required the bank values the property as if the work is complete. In this instance the ‘as if complete’ value of the property was less than the value of the property plus the cost of the works. Therefore the client had a shortfall of funds and did not have the means to contribute extra cash to complete.


In order to approve and settle the client’s construction loan, we took the following steps:

  • We educated the client and worked together with the builder to draft a fixed price building contract that would meet the lenders requirements
  • We restructured his other investment property loan so it could be refinanced with an extra cash out over to the same lender that was providing the construction loan. This would supplement the as if complete valuation shortfall
  • We conducted a detailed assessment of three years of financial statements – FY19, FY20, FY21 to present an analysis that the annualised YTD FY21 income was on track to exceed that of FY20 and FY19, net of JobKeeper and Cashflow
  • We were able to do this across all four business entities, meaning we did analyses on 12 sets of financial statements (P&L and Balance Sheet)
  • When we helped the client with a previous loan application we were able to achieve a policy exception to apportion the business loan repayments. This was in line with the business income since he was a 50% owner. For this application, we leveraged the previous file notes in order to direct the new assessor to provide the policy exception again
  • The client then met sufficient borrowing capacity to allow the LVR to increase to 90% and thus make up for the valuation shortfall. He otherwise did not have to put more deposit than originally planned.