businessOwned by: Cerberus Capital Management
monetization_onFunded by: Wholesale money markets
securityLMI Provider: Self-insured
account_balanceLender type: Non-Bank, Specialist lender
Bluestone Mortgages was a very successful non-conforming lender up until the onset of the GFC in 2007. It laid dormant until 2013 when it resumed lending in Australia.
As a specialist lender Bluestone Mortgages is a good choice for borrowers who don’t meet standard lending criteria. They’re not trying to compete on interest rates so you’ll probably pay a few percent more than you would with a bank.
In 2018 Bluestone was purchased by Cerberus Capital Management which is a large private investment firm. The funding injection that Bluestone received has enabled them to expand their team, lower their interest rates and offer more products to different types of borrowers.
How do Bluestone’s home loans compare?
They’re great at
- Refinancing and consolidating credit card debt and ATO debt
- Special solutions for borrowers with a bad credit history
- Low doc loans for self-employed borrowers
- Loans for businesses that have just started
- Funding business expansion using residential property as security
- Assessing loans using common sense instead of credit scoring
But they’ve got some drawbacks…
- They’ve got much higher rates and fees than a major bank
- The smaller your deposit, the higher your interest rate
- They lend a maximum of 85% of the property value
- Other specialist lenders may offer you a better deal
- Their risk fee, which is similar to LMI, can be quite expensive
- They don’t do construction loans
What home loans types do they have?
Bluestone Mortgages has four main products that have different rates and fees depending on the size of your deposit.
The Crystal Blue loan is designed for people with a clear credit history who can prove their income. This is typically chosen by people who don’t meet bank criteria due to their employment history or who are borrowing to fund their business.
The Clean Slate loan is designed to give people with a bad credit history a second chance. They can consider your application if you have defaults, judgement and even if you have been discharged from bankruptcy.
The Light Blue loan is a good option for self-employed borrowers who have had a business for over one year but who don’t yet have tax returns as evidence of their income. BAS or business bank statements can be used to verify your income instead.
The Business Easy loan is for borrowers with a newly established business that is less than a year old. You’ll need to provide bank statements to show that your business is trading but you won’t have to provide tax returns. This loan is a much higher risk to the lender as new businesses have an inconsistent income. So it has a higher rate than their other loans.
How does my credit impairment affect my rate?
Bluestone will categorise your credit history to be Clear, AAA, AA, A or BBB depending on the number of defaults, recently missed payments on your mortgage and if you have any history of bankruptcy or part 9 agreements.
A borrower that is categorised as Clear will get a better interest rate than someone categorised as BBB. In addition to this having a lower category may mean you need to provide a larger deposit.
Tips for applying with Bluestone Mortgage
Ask your mortgage broker to compare what they can offer to other specialist lenders such as Pepper or La Trobe as it always pays to shop around.
A good mortgage broker will also try to negotiate with the lender to get a better interest rate. While it’s very hit and miss with specialist lenders, it doesn’t hurt to ask!
Use Bluestone Mortgage’s loan application checklist to prepare for your mortgage application.
Note: This is the latest application checklist effective June 2017. Please refer to Bluestone Mortgages for their most up-to-date document requirements.
Bluestone client story: Peter, NSW
Refinance, consolidation of debts, business finance, low doc business loan.
Restaurant-owner Peter owned a house worth $2 million in a high net worth suburb in Sydney.
His business had struggled during winter which caused him to overdraw several credit cards and miss some repayments on his home loan.
In order to increase his clientele, he planned to renovate the outdoor area of his restaurant to prevent the same problems happening next winter.
Using business bank statements, we were able to show Bluestone that Peter’s business had a stable income over the past several years. It was clear that last winter was a just a bad period.
Based on this, they were happy to refinance his home loan and release equity for him to fund his business. This simplified his situation from having multiple high interest debts to one simple repayment each month.
Although the interest rate as higher compared to other lenders, we created a plan with Peter so he could be in a position to qualify for a lower rate loan in 2 years time.
Bluestone client story: Kim and Paul, NSW
Refinance an existing St George home loan and use the remaining funds to purchase another property.
For the past 10 years, Kim had been running her own excavation company with her partner Paul. After their many years of hard work, they decided that it was time to upsize and finally buy their dream home.
Including subsequent growth in the market, they had paid down their current St George mortgage to around 40% of the property value. The couple felt that with their strong financial situation they wouldn’t have any trouble qualifying for a mortgage and using the remaining funds from their home to purchase their new property.
They both had a clear credit history and their business had a high turnover. As business owners, they were unable to prove their income by traditional means because their tax returns were not up-to-date.
With one hurdle overcome, the next issue was the existing property itself because it had a crown road intersecting and a creek running through it. Plus, there was asbestos in the garden shed.
Most lenders are always concerned about the saleability of a property they use as a security for a home loan but specialist lenders have more flexible lending policies and are willing to consider unique properties.
The settlement on the purchase of their new property was only 10 days later and the couple would face significant penalty interest if the settlement didn’t go through on the specified date.
Kim and Paul were very quickly running out of time.
We contacted some of the specialist lenders on our panel who could consider the property but they would have charged a considerably higher interest rate than major lenders.
Ultimately, we approached Bluestone and they were willing to accept the security with BAS statements and an accountant’s letter.
It helped that the couple were able to use the equity in their existing property as part of their deposit on their new home, borrowing at around 70% of the property value.
By borrowing at a lower Loan to Value Ratio (LVR), they were able to further reduce the high interest rate charged by specialist or non-conforming lenders like Bluestone.
By providing all of the income evidence upfront and working closely with the key decision makers at Bluestone, Kim and Paul were able to settle in time and avoid huge costs.
They’re now living in their dream home.
Compare Bluestone Mortgages to other lenders
Not sure which lender is right for you? Our Home Loan Experts can help!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.