Home loan dilemma

kiwimex on 12/09/2020 - 10:49

Currently applying for a home loan, application will be sent Monday by the in-house broker from CBA.

My dilemma is due to Covid, lending criteria has changed to effect self employed meaning all applications goto credit and cant be approved in house. My wife's visa renewal, and one off accelerated depreciation on a vehicle purchase to reduce my income for the 2019-2020 financial year. Currently in a partnership with on either silent partner (bank considers earnings to be split 50/50).

Signed contract and had both my wife and my name on the contract, had issues straight away as my wife is currently on a bridging visa as we have been waiting 26 months for her visa renewal. (first time it was renewed it took 6 weeks) we were initially advised upto 18months. Anyways no lender will take her into consideration due to the bridging visa status, Immigration cant even guesstimate a time frame for the approval.

So we have just had to cancel the contract under the finance clause and re-write a new contract. CBA Broker is relatively confident we can get approval with just myself on the application, my earnings are about 95k, self employed, I intend to borrow just under 80% of the purchase price. 2 dependants with one turning 18 in 6 weeks. No other loans outstanding and only $3.5k in credit cards. Bank appraisal of the house has come back just over the purchase price, so happy about that.

CBA Broker thinks if we don't get approval 1st time round we can now add my wife's casual income on the 2nd application as she would not be on the title of the house.

Looking to borrow $415k
Deposit $120k
Earnings $95k (Had a 1 off Covid depreciation on a vehicle that reduced my income by $50K this past financial year)

Mitigating factors.

1 off $50K depreciation to not effect the earnings of the year as the bank accepts its a one off.
1 Dependant becoming non dependant is 6 weeks.
Silent Partner doesn't receive distribution form the partnership (back by accountants documentation.

Is there anyone in the industry that can shed some light on my chances of securing the finance? anything I might be missing and should be adding weight to my case?

TIA

Financial

Comments

  • Gunther on 12/09/2020 - 11:28

    Shouldn't of brought that vehicle to be honest….

    • kiwimex on 12/09/2020 - 11:44

      Was purchased 15 months ago, it’s just an allowable write off due to Covid-19.

    • [Deactivated] on 12/09/2020 - 15:56

      OP fake business man

      • kiwimex on 12/09/2020 - 17:55

        ??!

    • polarq on 19/09/2020 - 09:32

      Shouldn't of brought

      Shouldn't have bought*

      Fixed that for ya!

  • silenthillrocks on 12/09/2020 - 11:34
    -5

    You better get a lawyer son, you better get a damn good one

    • kiwimex on 12/09/2020 - 11:45
      +7

      For what? I’m applying for a home loan not suing anyone.

  • conan2000 on 12/09/2020 - 11:37
    +1

    It will be tight I expect, as the bank will look at the minimum expected living cost for a family with two kids, which is probably over $3k. Quick look at the CBA mortgage calculator suggests over $1800p/m mortgage and $95k income is about $5.4k per month (Assuming $95k includes super).

    I have found CBA to have quite loose lending criteria compared to other institutes though. They assessed the largest borrowing power on a recent application I did compared to HSBC and Suncorp.

    I'd be looking to review all of your outgoing bills to minimize (mobile/ISP/private health etc, anything that is easy to reduce quickly and minimises your monthly committed outgoings) any perceived expenditure and really cut back on any non-essential spending so they don't look at this as a negative.

    • kiwimex on 12/09/2020 - 11:46

      No doesn’t include super.

      All my accounts are with CBA, I am able to write a lot of expenses off through the business. Such as vehicle running costs, phone and internet etc.

      • miwahni on 12/09/2020 - 23:49
        +1

        As @conan2000 said, banks usually look at minimum expected living costs - and they apply the higher of the actual declared costs, and the HEM. By writing off living expenses through the business you're not helping your assessment, you're just risking lowering your income due to higher costs attributed to the business.

        The fact that your loan has to go to Credit isn't a dilemma as such; the credit team should be using the same policy to assess your loan as an in-house lender would. Only difference is that credit underwriters don't get paid bonus on every loan that settles…. good luck, anyway, it's a stressful time waiting for your finance approval.

  • SelfMade on 12/09/2020 - 12:12
    +2

    I went through a similar process a few months ago and am self employed as well. My wife and I signed the contract in January and settlement was in June. During that time all hell broke loose with COVID and had to re-apply under new lending criteria, was very stressful but got through in the end. We went with CBA as well.

    I'd suggest getting an accountant to provide forecasted earnings over the next year showing the growth (hopefully) of your business. You can submit this to the bank which assists the credit team in having some kind of proof of future earnings…basically need to think of it like this, if there was to be an inquiry from the likes of say the royal commission into your loan, can the bank point to evidence that they were lending to you in a responsible way.

    The loan amount your going for is relatively low however with the one income and basically 3 dependants it depends on each banks criteria of how that is assessed.

    A clear issue though is how they'd treat the silent partner, seeing as though you have proof from an accountant that this partner doesn't receive any funds from the business, it might be ok, but the bank will surely ask what is their role and why they wouldn't be receiving any funds and if they had any legal recourse to demand funds at a future point in time.

    The vehicle write off doesn't matter, banks come across this daily and know it's not a regular occurrence.

    I also called up about 5 highly rated brokers asking for their advice and what they'd think, I'd suggest you do the same…there's a lot of people on OzBargain who have no clue.

    The forecasted earnings from the accountant would be key, the higher the better…obviously within reason.

    Good luck!

    • kiwimex on 12/09/2020 - 12:27

      I have already submitted a letter from the accountant explaining the partnership setup and distribution etc, he has briefly mentioned earnings increasing year on year and forecasting for this to continue. I Might have him throw some more detail into the forecasting.

  • Kandrew on 12/09/2020 - 13:18
    +3

    If you think that the bridging visa is the biggest issue, I suggest that you contact your local Federal MP and politely ask him/her to make enquiries with Immigration about how long the visa processing might take.

    Do not ask them to intervene. Just ask them to enquire.

    I did that with my wife's visa when she applied for whatever visa it was some time after she arrived from the U.S., and suddenly approval was given. We had waited, I think, 8 weeks, having been told 6. After I went into the MPs Electorate Office and spoke to the staff, they did whatever they do and the approval came within 3 days.

    I didn't have any special case. I just asked them to enquire and gave our details.

    Magic.

    All the best with whatever route you take.

    • kiwimex on 12/09/2020 - 13:51

      Thanks for the info, not really concerned about the visa TBH won’t make a difference now as the contract has been re written.

  • GuyfromMelbourne on 17/09/2020 - 23:15
    +1

    Hey op, is the situation sorted already? If not. Just PM me. The case looks okay to me so far. Considering good deposit. And one off expense.

    • kiwimex on 19/09/2020 - 07:45
      +1

      Just got approval Friday afternoon.

  • kiwimex on 19/09/2020 - 07:45
    +1

    UPDATE…..! Finance Approved

    • polarq on 19/09/2020 - 09:34
      +1

      Congrats mate. Hope you enjoy the new purchase!

Login or Join to leave a comment
Login Join