Getting a pre-approved loan before losing an income?

I'm itching to get stuck into IP#1. We are able to release equity from our PPoR and stay within comfortable LVR levels (80%) to fund the purchase… plus we have an extra $100K cash savings that we shouldn’t have to touch. All good :)

Snags:

1. Wife due to give birth in 4 weeks. Hence imminent loss of her income for 1 year (she plans to return to work after this).
2. I was made redundant this year. Am now working again (professionally - good income), but only on a casual contract (hourly). If requested, I am not yet able to provide 3 months payslips.

Right now we are both comfortable with the idea of a new mortgage to fund the IP and would love to dive in, but I don’t think the banks would give us finance based on my recent work history.

One option which was suggested to me by a friend was to get a loan pre-approved now, based on my wifes salary/pay history, but just don’t tell them about her pregnancy and upcoming break from work.

What do you think?

We can happily service our PPoR loan from my current work, and our $100K savings is more than enough safety net for covering any CF- periods for the IP.

Cheers for your advice
 
hi there Samwise,


You may need to actually find a broker and discuss your options

I have bought property personally while pregnant.:D

BTW, how long were you off work for?

Regards JO
 
Yeah, could discuss with broker… he might frown on me though (and plus brokers are not financial advisors, and we're verging on their territory)

I wanted to release the equity from my PPoR as a LOC and then just go out and get another (new) loan for the remaining 80%.

I was unemployed for around 6-7 months all up - been patchy starting again (few weeks working, few weeks off, few weeks working again) but am confident things are stabilising...
 
A lenders employment check may still throw a spanner in the works if the person confirming makes mention of the leave. The lender may also make the employment confirmation call at time of your formal approval request.
 
Yes I think you're right

I spoke to our broker and he said that lending has tightened up over the last 18 months and specifically:

1. My wife would have to display 3 months payslips at the time of settling (not just at pre-approval)
2. Non-disclosure of her pregnancy by them would violate the terms of their financial services lisence
3. I need to displat 3 months continuous payslips with one employer (I may be changing jobs soon)

Basically we're stuffed :(

Time to buy shares instead? :rolleyes:
 
I'm going to be in a similar position shortly ... am resigning full time job to go contracting (through own company) and then will be looking for a loan in 3-6 months time. Will be able to show high income for the past two financial years (as permanent employee) and then BAS statements for one or two quarters (or create own payslips maybe?). Company ABN won't be two years old (only 3-6 months). Anyone have any thoughts or suggestions if I will have problems?

One positive is that the loan will be in joint names and my wife works fulltime - so only will be me with "self" employed issues ... however her income alone wouldn't support the loan value we require.

Regards,

Jason
 
IT industry. Contracting to a few different consulting companies and some direct clients. 80% LVR (or slightly less).

Thanks,

Jason
 
Im sort fo with your broker...........I think there are issues that YOU need to really consider, id personally advise you to sit back for a while, not from a financial point of view, but that time of life point of view. But this one cracked me up....

Non disclosure of the pregnancy..............hello, I have had clients where mum is back at work one week after confinement, many dont have any choice, so pregnany per se isnt an issue.

ta
rolf
 
Non-disclosure of her pregnancy by them would violate the terms of their financial services lisence
But this one cracked me up....

Non disclosure of the pregnancy..............hello, I have had clients where mum is back at work one week after confinement, many dont have any choice, so pregnany per se isnt an issue.
I had the same thought. Your fertility status is really none of the lender's business, unless she planned to quit work, etc. But what if she were planning to return immediately to work and had no period of time without pay? One never knows, though, how they'll feel when the baby arrives, plenty of people planning to go straight back to work feel they need to stay home, and vice-versa.

Having had my husband in a similar situation, provided you're working in the same industry and have a full-time or near-full-time workload, there are lenders out there that shouldn't be too concerned at having changed status from employee to contractor. If you're building up a business, though, and not yet working full-time, it's more of an issue.

Good luck with the investing and the baby. :)
 
Cheers for the helpful comments

I think maybe people missed the point re: pregnancy…

The baby is due in 4 weeks and my wife will be taking a year off… therefore unless we find somewhere, buy it and settle in the next 4 weeks then we'll have to disclose to the bank the fact that she is not at work... for exmaple if we wanted to settle in 3 months time.

Yes, maybe time to sit back for a bit... though frustrating as i see house prices rising fast!
 
Addressing what you're trying to do to get around servicing issues post baby, some pre-approvals might hold up, some wouldn't.

May pre-approval don't have anyone check the supporting documents, and it all has to be re-supplied at actual purchase. Some lenders only do the employment check as their final verification (ie after the valuation of the property).

ALL pre-approvals state that if your circumstances change, the lender has the right to reassess the application. Many lenders do reasonable checks to ensure that things haven't changed.

If you do decide to proceed with this it can be done, but make sure you've got a realistic strategy for affordability. New baby stress and financial stress is not a good combination.


Personally I don't think being pregnant is grounds to not take an income into account. As suggested, many mothers go back to work very quickly after the birth.

Would you believe that I've heard of lenders being reluctant to lend money based on the 'child bearing age of the female applicant'? What a load of rubbish.
 
Would you believe that I've heard of lenders being reluctant to lend money based on the 'child bearing age of the female applicant'?
Are lenders exempted from the discrimination legislation? Discriminating on the basis of an actual - or planned - loss of income related to pregnancy is reasonable; discriminating on the basis of fertility alone certainly isn't!
 
Addressing what you're trying to do to get around servicing issues post baby, some pre-approvals might hold up, some wouldn't.

May pre-approval don't have anyone check the supporting documents, and it all has to be re-supplied at actual purchase. Some lenders only do the employment check as their final verification (ie after the valuation of the property).

Hmmm, I'd probably look a bit of an idiot if I went thorugh the whole time-consuming process of looking for IP's, offering and then stumbling over at the finance stage because I had a thought that our pre-approval "might" hold up?

I'd need to know yes/no… but not sure how to find this out?

As I said before, serviceability in the short term does not worry us… we have plenty of cash savings, and in the medium term my wife will return to her good paying job.

Damn frustrating :cool:
 
Tracy I admit it's been a long time since I've heard this and it could easily be argued around. Something like this could be considered in an overall 'credit scoring' scenario.

Credit scoring is quite arbitrary. Things contributing to a loan being declined can include, 'too many credit inquiries', or, 'moved house or job too many times'.
 
Thanks PT_Bear for your previous helpful comments, tust noticed this one.

How?

The obvious (and correct) way is to make it service on the remaining income.

I have known people who obtained a loan whilst pregnant, knowing that the baby would be born prior to settlement and that their change in circumstances might make servicing difficult. It was a bit of a case of, "don't tell and they won't ask". (This was a friend who got the loan long before I was in broking).
 
Sorry, just to clarify...

If by " make it service on the remaining income" you mean mine, then thats not possible, becaus ei cant display previous 3 months continuous pay
 
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