Hi Guys,
I'll cut right to the chase. We've negotiated on an apartment in the inner eastern suburbs of Sydney for $780k. Everything was looking perfectly fine until our loan application was rejected by ING. It turned out that my partner had a default on her credit rating. It was for a David Jones store card that she had many years ago and this was the first we'd heard of it. It happened in 2003 when we moved from Brisbane to Sydney, so they simply didn't chase us up and lodged a default. We paid it as soon as we found out and it's now shown as paid on the credit report. It won't disappear off the report until next July.
However, I had no idea how dire this could be in the eyes of lenders. Pretty much no normal lenders will touch us now confused. It seems bizarre to me. Surely this happens all the time to people and we had absolutely no way of preventing this. Why would we sit with $60k in a bank account doing nothing when there was a unpaid debt on our record?
We're otherwise exceptional candidates. Between us we gross about $230k/year. I have a company, so I appear to be earning much less, but we're still well and truly astromomically above the level of servicability for the loan on this property.
So we're now faced with the very real possibility of not being able to finance the apartment.
I know I could get finance through Pepper Homeloans. However, with 1% application fee, 3% interest premium (7.99%), and 3% break fee, it adds up to a total cost of $46k in the first year!! And then on top of that, when we go to refinance next year, we may still be faced with another LMI of $11k.
It seems grossly unfair that because David Jones decided not to pursue us adequately for payment of the store card, it's now preventing us from buying our home or costing us up to $57k!.
We have an application in with Westpac at the moment. We've provided a letter of explanation about the DJs card, but I'm not holding my breath. We expect to hear back tomorrow, but chances are I'll still be desperately trying to find a finance solution tomorrow night.
Can anyone suggest some options for me?
My broker is probably going to try St George next, and then we're onto the highly undesirable non-conforming lenders like Pepper.
He is urging me to try to scrape together a 20% deposit. This will open up many doors that are currently closed to us as it will take mortgage insurers out of the equation. He has recommended I try to take out a business overdraft / loan for $50k and use this to bring my deposit up to 20%. I'm not sure how successful this will be because they're going to see the applications with ING and Westpac on my credit report and it may affect my overdraft application.
Here's the full financial details:
Income:
Me: $120k gross, but actually only showing about $40k on my 07/08 tax return. My business will save $40k in rent once I buy the place, so my income willincrease accordingly. (I'm a web programmer / consultant)
Partner: $110k gross, with bonuses up to $100k+. (she's an investment analyst)
We've both been continuously employed since uni. Me: 14 years, her: 10 years.
Deposit:
$130k currently (plus another approx $16k before settlement)
$60k of the deposit in made up of gifts from family/friends.
I can show genuine savings of $60k on bank statements over 6 months. However, I stupidly let this accrue in my business account, living off my partner's wages, so it's a slight grey area for lenders
LVR
Will be 86.21% at settlement, taking into account stamp duty and LMI of $41k total.
Please any help would be greatly appreciated. We have a strong connection to this property. We've been renting it for 4 years and have many friends in the area. I work right next door and my partner works only a 15-min walk away. We have great plans for increasing the value of this property as we've had a long time to understand how it could be improved. So I really want to settle on this one.
I'll cut right to the chase. We've negotiated on an apartment in the inner eastern suburbs of Sydney for $780k. Everything was looking perfectly fine until our loan application was rejected by ING. It turned out that my partner had a default on her credit rating. It was for a David Jones store card that she had many years ago and this was the first we'd heard of it. It happened in 2003 when we moved from Brisbane to Sydney, so they simply didn't chase us up and lodged a default. We paid it as soon as we found out and it's now shown as paid on the credit report. It won't disappear off the report until next July.
However, I had no idea how dire this could be in the eyes of lenders. Pretty much no normal lenders will touch us now confused. It seems bizarre to me. Surely this happens all the time to people and we had absolutely no way of preventing this. Why would we sit with $60k in a bank account doing nothing when there was a unpaid debt on our record?
We're otherwise exceptional candidates. Between us we gross about $230k/year. I have a company, so I appear to be earning much less, but we're still well and truly astromomically above the level of servicability for the loan on this property.
So we're now faced with the very real possibility of not being able to finance the apartment.
I know I could get finance through Pepper Homeloans. However, with 1% application fee, 3% interest premium (7.99%), and 3% break fee, it adds up to a total cost of $46k in the first year!! And then on top of that, when we go to refinance next year, we may still be faced with another LMI of $11k.
It seems grossly unfair that because David Jones decided not to pursue us adequately for payment of the store card, it's now preventing us from buying our home or costing us up to $57k!.
We have an application in with Westpac at the moment. We've provided a letter of explanation about the DJs card, but I'm not holding my breath. We expect to hear back tomorrow, but chances are I'll still be desperately trying to find a finance solution tomorrow night.
Can anyone suggest some options for me?
My broker is probably going to try St George next, and then we're onto the highly undesirable non-conforming lenders like Pepper.
He is urging me to try to scrape together a 20% deposit. This will open up many doors that are currently closed to us as it will take mortgage insurers out of the equation. He has recommended I try to take out a business overdraft / loan for $50k and use this to bring my deposit up to 20%. I'm not sure how successful this will be because they're going to see the applications with ING and Westpac on my credit report and it may affect my overdraft application.
Here's the full financial details:
Income:
Me: $120k gross, but actually only showing about $40k on my 07/08 tax return. My business will save $40k in rent once I buy the place, so my income willincrease accordingly. (I'm a web programmer / consultant)
Partner: $110k gross, with bonuses up to $100k+. (she's an investment analyst)
We've both been continuously employed since uni. Me: 14 years, her: 10 years.
Deposit:
$130k currently (plus another approx $16k before settlement)
$60k of the deposit in made up of gifts from family/friends.
I can show genuine savings of $60k on bank statements over 6 months. However, I stupidly let this accrue in my business account, living off my partner's wages, so it's a slight grey area for lenders
LVR
Will be 86.21% at settlement, taking into account stamp duty and LMI of $41k total.
Please any help would be greatly appreciated. We have a strong connection to this property. We've been renting it for 4 years and have many friends in the area. I work right next door and my partner works only a 15-min walk away. We have great plans for increasing the value of this property as we've had a long time to understand how it could be improved. So I really want to settle on this one.