A Quick Overview
|Customer||Jacob and Laura, a couple|
|Customer Goal||To purchase vacant land off-the-plan and build an owner-occupied house|
|Problem||Finance was due for a vacant land contract while Jacob was on voluntary leave with minimal pay|
|Loan Amount||Land purchase loan = $418,900
Construction loan = $602,900
Total loan= $1,021,800
|LVR and Term||78% LVR (loan to value ratio), 30-years loan term|
|Income||$82,271/HKD 483,948 per year (Jacob) | $106,243 per year (Laura)|
|Solution||Submitting documents showing that Jacob plans to return to working full-time. Using equity from sale of an investment property Laura owns.|
Securing two loans at the same time, for land purchase and owner-occupied home construction, is not a simple feat for any couple, even when both partners have a decent income and spotless credit history.
The approval of such loan applications can become even more difficult if one of the partners is on voluntary leave with minimal pay and the other has just returned from maternity leave.
What is the best home-loan solution for a couple in these circumstances, if they have already deposited a certain amount for the land contract and the finances are due soon?
Jacob and Laura had been renting a house they shared with Laura’s father, who is a dependant of Laura’s and helps the couple with child-rearing.
Laura owned an investment property and they planned to use their personal savings and the equity from the sale of this property as a deposit to buy vacant land and build their dream home.
They wanted to welcome their baby and start their new lives as parents in a new home.
Jacob works as a pilot for an airline company based in Hong Kong. The couple purchased vacant land in December 2020, which was due to be registered in late 2021. They had already paid a deposit of 10% for the land contract.
They decided to apply for two home loans: one for the land purchase and the other as pre-approval for construction of an owner-occupied home.
With Jacob being an expat, the couple had limited borrowing options
Lenders were not ready to offer more than 80% of the property value for either of the loans.
Also, the couple had rushed into the purchase of the land at an unfavourable time. They entered into the contract just three months after Jacob was put on voluntary leave in Hong Kong with minimal pay, due to lack of work at airline companies during the pandemic.
With the rest of the finance for the land contract due on 1 April 2021 and Jacob out of full-time employment, the couple began to look for help with their problems.
If they failed to finance the land contract by the due date, they would lose both the land and the deposit.
An expert solution
A letter of employment, income payslips and sale of investment property
When Jacob and Laura approached Home Loan Experts, they were connected to one of our brokers, Ayush Basnet.
As Jacob was due to return to his full-time position in the second half of March 2021, Ayush asked Jacob if his employer could provide a letter stating he would return to his full-time position. Jacob managed to obtain the letter.
Laura had just returned to her full-time job as a high-school teacher in January, after over a year on maternity leave, and was able to provide one current payslip as a full-time employee.
Ayush presented both Jacob’s and Laura’s old full-time income payslips and income-tax returns. This information convinced lenders that the couple had good employment and a reliable income history of more than five years each. The couple also had an excellent credit score for their existing debts.
Ayush sorted a conditional approval.
In the meantime, Laura was able to settle the sale of her investment property; the equity from this added to their deposit.
Timing was key to receiving formal approval for the loans. Before the lenders would agree, Laura had to sell off her property on time, Jacob had to return to Hong Kong and provide his payslip showing income.
Ayush negotiated a one-week extension to the deadline for approval. He then went above and beyond his responsibilities as a broker and guided Jacob and Laura so activities were completed on time for formal approval.
The lenders approved both the loans and the couple could finance their land contract on time.
A happy ending: Off-the-plan and construction loan approved
Jacob and Laura were able to breathe a sigh of relief now that they were able to keep the land and finance the construction of the house.
It was a close call, but they made it.
If your circumstances are similar to Jacob and Laura’s, call us on 1300 889 743 or fill in our free assessment form to get the best help from Home Loan Experts.