- Home loan type: self-employed home loan, low doc home loan, off the plan, less than 2 years ABN, high density unit, permanent resident (PR)
- Customer goal: To get formal approval for an off the plan property using 1-year income evidence.
- Loan amount: $545,000 (62% of the property value).
After migrating from Russia, Anna (60) was happily living as a permanent resident (PR) in Australia and pretty soon asked her son (39) to join her.
He was automatically granted a Permanent Resident (PR) visa because of their family ties.
Both self-employed sole traders, Anna worked as a nanny and her son ran his own handyman business and both mother and son worked hard to build their savings.
After a couple of years of renting, they were able to save a $325,000 deposit. Incredible!
Pretty soon, they had their eyes set on an off the plan property in Wooli Creek, Sydney worth $870,000.
Thanks to their large deposit, they were borrowing at a very low Loan to Value Ratio (LVR) of 62% of the property value.
After 18 months of construction, their builder contacted them and let them know that their apartment was finally ready for them to move in.
Anna came to us when a major bank refused to approve her home loan.
Even her own bank, St George, with whom she had a good repayment history, refused to approve her loan.
Unfortunately, Anna had already paid the deposit on the off the plan purchase without getting home loan pre-approval first.
The reason why she was declined? There were several reasons.
Firstly, the location of the property was considered to be a high-density area in Sydney.
Lenders consider properties in high-density locations as high-risk because inner-city locations tend to fluctuate in price more often than other types of properties.
It has to do with supply and demand and, for a number of years, there has been an oversupply of small units in Australia’s major capitals.
Problem number two: the couple’s employment and income situation was unusual.
They were in a good financial position but their income evidence was not up-to-date.
Most Australian banks require self-employed borrowers to submit a minimum of 2 years of financial documents and hold an ABN for two years.
Luckily, one major lender was willing to accept a 1-year ABN.
Still, their tax returns didn’t show consistency in their income.
After speaking with Home Loan Experts mortgage broker Azita Bokan, she found out that she needed to show that her latest tax return reflected a stable income year on year.
Anna hadn’t actually completed her latest tax return but, luckily, in Australia, you can submit your tax return any time between 1 July to 30 October.
Once Anna completed her 2018 tax returns for both businesses, she was able to provide her Notice of Assessment (NOA) along with her home loan application.
Azita was then able to choose the right lender and so they could borrow $545,000 or over 62% of the property value (62% LVR) to complete their purchase.
Anna and her son planned ahead and made sure that they kept saving during the building process.
This was just in case the final property valuation came in low and they would need to make up the shortfall.
Even better, they were able to avoid the significant cost of Lenders Mortgage Insurance (LMI) because they borrowed less than 80% of the property value.
By approaching Home Loan Experts, Anna was able to get her home loan approved on time and avoid losing their deposit on their dream property.
She and her son were so grateful, they came to our office and surprised Azita with flowers and chocolates.
They are now living happily in their new home.
Call us on 1300 889 743 or fill in our free assessment form to start your home buying journey today.