COVID 19 - Lost Job - Investment Property - Cannot Get a Loan

seonken on 18/12/2020 - 22:31
Last edited 19/12/2020 - 09:08 by 1 other user

I with my partner booked a turn-key investment townhouse with 50K deposit two years ago. During Covid the project got dragged on and my partner lost the job for 6 months and then back on but only on casual with only two months into her new job. The property will be ready in about two months.

Went to a bank and an agent both said it is going to be hard for the loan due to short job history. I do not think the contract has a specific clause subject to finance, I was told in no finance, they usually sale to it someone else and then I get my money back. Lessons learned.

Any suggestion, advice or what is coming my way will be helpful. Thanks

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  brad1-8tsi on 18/12/2020 - 22:38

  +4

  Suggest you seek some real legal advice.

  Also read your contract and understand what you are reading.

  Can you substantially extend the settlement date?

  I would suggest that you will probably have to walk away and take a financial hit.

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  tsunamisurfer on 18/12/2020 - 22:38

  +6

  I would talk to a few more lending institutions and brokers and see what is possible.

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  Seraphin7 on 18/12/2020 - 22:41

  As ever, speak to your solicitor, speak to multiple mortgage brokers (and if they can't help ask them specifically if they know anyone who can).

  That said, no job/poor job history typically equals no loan. How that might affect you financially will ultimately be up to the terms of your contract and what you can negotiate via your solicitor.

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  dasher86 on 18/12/2020 - 22:41

  +2

  Firstly re-read your contract properly.
  It's unlikely in these contracts you will get your deposit back. It's usually forfeited and you will most likely also be up for reselling costs and the difference between sales price if the property value has dropped.

  I assume when you say you spoke to an agent you meant a broker? Speak to more.

  Do you have a current mortgage on your main residence - speak to your financer.

  Can you get a guarantor - even short-term and refinance without one later…make sure you can actually make repayments in the short term and also make sure the guarantor knows what they are up for.

  $50k deposit = 5% off the plan, $1m townhouse investment?

  • 

    seonken on 18/12/2020 - 22:50

    10% deposit. 500k townhouse

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  CyberMurning on 18/12/2020 - 22:48

  +1

  How about your job…..

  • 

    seonken on 18/12/2020 - 22:50

    +1

    I do have a job but salary is not enough to cover my current and investment

    • 

      dcep on 19/12/2020 - 00:08

      +2

      any equity from your current as cross-collateral through refinance ?

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  mskeggs on 18/12/2020 - 23:26

  +3

  Consider what you can do in this situation from all angles.
  Can you find a lender that will cover you at 4%? 5%? 6%?
  It might only be a year till job history is longer etc. much better than losing a deposit.
  Can you move in and get an owner occupier loan?
  What a powerful message to kids about the things you had to do for a year or two early to secure your future later would that be.
  Can you work a second job for a while to boost savings and earnings?

  Not gonna lie, my grandparents told lots of stories about the depression. The people that just sat by and were passive in those stories were not the heroes. The people that did extra work, and endured temporary unpleasantness were the people who came out a success.

  • 

    avoidfullprice on 19/12/2020 - 10:16

    +1

    +1 these are all good suggestions.

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  Jaff on 18/12/2020 - 23:30

  +2

  Have you tried sale by nomination?

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  MS Paint on 19/12/2020 - 00:23

  +4

  I was told in no finance, they usually sale to it someone else and then I get my money back.

  What you were told and what's in your contract, I'm guessing, are two very different things.

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  whooah1979 on 19/12/2020 - 02:22

  +1

  A lot of people took a loss in March. May be cut your losses now before getting into more debt that you can't afford to service.

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  avoidfullprice on 19/12/2020 - 10:19

  they usually sale to it someone else and then I get my money back.

  Depends on the difference between your contract price and new sale price. Even then I wont bank on deposit refund. Maybe getting out of the contract lawsuit free is already a good outcome.

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  tajid on 20/12/2020 - 12:12

  Have you considered non-bank lenders? Their interest rates are higher but they are more flexible with lenders with less proof of income etc.

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  pndl on 21/12/2020 - 15:21

  You need to be selective with your lender as while they mostly have similar policies, their difference is what will get you across the line or not in this case

  Some banks will want 6 months casual income history but some - CBA to name one - will take as little as 3. If you apply before that time the bank will immediately not consider the income, so wait till you are at least 3 months in with a bank that will take a short casual employment history.

  Another aspect is rental income. Banks will want to see a rental appraisals so you can get a few rental appraisals from real estate agencies and present the best one. Some banks take 70% of rental income while others take 80% towards your serviceability.

  Make sure you include ALL your income - including interest, dividends, leave loading, bonuses.

  Close down ALL you credit cards as $10000 in credit limit (not balance) decreases your borrowing power by $50000.

  Credit policy information isn't usually publicly available for each bank, I would speak to a mortgage broker as they will have access to it across different lenders and can compare for you.

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  seonken on 23/12/2020 - 11:30

  +3

  Thank you guys. You have helped me understand my options now. I appreciate your time and efforts. It is not as bad as I thought. Someone also suggested me to contact the vendor for cancelling the contract on compassion ground. As suggested I went to Bank of Mel, my existing home loan provider and their response was positive. My partner was also offered a parttime job at her current workplace - so we may as well make it.

  Lessons Learned:
  Read contracts before signing.
  Don't commit unconditionally.
  Know your way out in contracts.
  And, DON'T trust Salesmen.

  Regards,

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  [Deactivated] on 23/12/2020 - 15:23

  Just read ur comment.. good luck