Upsizers Settle Down in Glebe

SUCCESS FACTORS

  • Presented bridging loan options to client immediately after our assessment as they needed an efficient strategy to settle their new home
  • Ensured the client was well educated on Bridging Loans and how it worked – peak debt vs end debt, duration of bridging loan, interest rate and repayments 

THE SITUATION

  • Couple had been referred by an Accountant who had been actively property hunting to upsize their home for the family of 5, with 3 dependents. Couple were both teachers, however the wife had been on Maternity Leave taking care of their new born
  • Couple had a strong financial position with 5 properties of which 2 investment properties were unencumbered
  • Even though the client had reached out to us, prior to a full assessment the couple purchased a $2.125M property in Glebe and paid a 10% deposit of $212,500 with 84 days to settlement
  • Due to equity available in their existing properties, clients had thought they could use this equity for their next purchase 

THE CHALLENGE

  • Clients exchanged on a contract and paid a 10% deposit without a complete assessment of their borrowing capacity and available deposit

  • Existing home had not yet been listed for sale which meant it was unlikely we could proceed with a simultaneous settlement, of selling existing home and purchasing new home

  • Existing property was mortgaged to lender that did not meet their requirements for the new property

  • Clients had multiple admin fees charged due to loan repayment being in arrears

  • We were also informed two days prior to settlement that the current home was cross collateralised with an investment property 

THE RESULTS

Since our clients had agreed with a Bridging Loan, we needed the current property refinanced to the new lender. Due to their property portfolio it was extremely important to tightly document all required supporting documents and information that the lender required.

We then presented the deal strongly to the lender whilst carefully detailing the late loan repayments which were out of character for the clients. In addition to the explanation, we presented their savings at the time which exceeded $500K showing clients had more than sufficient funds to cover these repayments.

Formal Approval was issued two weeks from loan submission and we were on track for settlement. Two days prior to settlement, clients’ existing lender informed us that the current property was cross collateralised with their investment property. 

Due to time constraints we knew the most efficient way forward would be to substitute existing property with an unencumbered investment property. We proceeded with this strategy immediately and requested a 7 day extension to settlement. 

We were able to order valuation and substitute the investment property, allowing settlement to occur without penalty interest to the client. 

During the application, clients also took on our advice to list the property as soon as possible. Within 3 months the client sold their home and discharged the bridging loan, avoiding a massive interest bill.

WHO TO TALK TO

Priscilla Tan
Senior Finance Broker

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