Knocked back by SGB, what do I do next?

[MissHoney]

Hi there,

After a good half year or so absence from the forum I am seeking some help with a finance question. I am hoping someone might be able to point me in the right direction...

We have been knocked back by our bank (SGB) on the basis that our income is too low and they won't lend us any more money. The 'low' income is mainly due to my maternity leave (two lots and twins to boot!) as shown on my last tax return in particular. I am self-employed but the actual month to month money coming into my company is pretty healthy now (for more than 6 months now that my working schedule is back). I can prove this in a general way as the practice where I rent an office does the billing for me. In addition to my income there is my husband's income but this is average and much less than mine (we both work part time to care for our children). There is also income from 3 cash flow positive IPs (not massive but enough).

Our PPOR and 3 IPs are all financed through SGB (yeah, I know...x-coll and not everyone's choice...a beginner's error that we would like to extract ourselves from). I think we are at 80% LVR.

We do want to buy another CF+ property and have a nice little system worked out with renos and renting out but we can't seem to get past the finance issue. SGB will NOT revalue our properties if the income issue is not satisfied.

How can we get around this?

Is there a way to access our equity (which would be enough for a healthy deposit on another house in the 250-300K range) and then use that as the deposit amount with another bank? And how do we go about this?

Or do we need to just suck it up and use cash as a deposit and go with another bank or non-bank institution? But won't they too doubt our income capacity?

What about low doc?

I have chatted to a few mortgage brokers and as soon as we give them our financials they run a mile and we never hear from them again (seriously guys, it is not that bad...it's just that being a mum with 3 under 3 messes with the financials)...I am sounding desperate now but I am ready to pull my hair out with frustration.

Do we sell one of our IPs (one that is not quite CF+ and a bit of a pain with the owners' corporation)? But this one will be looking after itself in a year.

Anyone who can help, or even point me in the direction of a good mentor (happy to pay for good quality advice!) please I would gladly receive your comments.

Many thanks if you've just had the patience of a Saint and read through all of that!!!

 

[Qlds007]

The Dragon certainly have a way of letting you down gently as an existing customer.

Choices could be varied but i have to say without real hard data it is difficult to comment further.

Unfortunately having the loans crossed will make life a little harder as you might need to unscramble them before moving forward.

 

[Peter_Tersteeg]

If you've got sufficient equity there's always a way, but at some point serviceability does run out. There are ways around it, but it can take a fair amount of forward planning.

St Georges serviceability isn't great compaired to many lenders, but there is sometimes a point where you can't get beyond any lender. In the current financial environment, it is simply getting very difficult to obtain finance if your situation is too far out of the box. In many cases lenders simply don't have the flexibility to be able to make exceptions that they might have been able to do a few years ago.

 

[Rolf Latham]

Hiya

Id start by unravelling some or all of the xcoll, so that when you find a way out via whatever means, that you arent stuck with that mess.

Having had much experience at failed xcoll breaks with St George ( and other lenders) it may take many months to resolve, so the sooner you get into it the better.

ta
rolf

 

[Y33]

Just been through the un X scenario with St.G 5 properties X to one loan, now 2 to one loan and the other 3 all free. You need to contact a valuer that is St.G approved. Get the valuations and if the equity is enough un X. I actually got St.G to pay for the valuations.

Then try other places including WPac. For some reason the WP guys seem to like taking St.G clients even though same group.

Also after negotiations recently broke down with St.G regarding % rates I went looking elsewhere and have been approved by 2 others to take over the loans at better rates than St.G would offer.

 

[craigb]

I was dumped by st george too! so i went citi bank, great lo doc's and they have not missed a beat!

 

[josko]

Hi Miss Honey,

How frustrating for you. I can only add that I also think you should start look at unravelling your X-Coll.

You may even have to refinance away from them. It depends on how much you want another property.

Regards Jo

 

[MissHoney]

Thanks to all for advice

Hiya

Id start by unravelling some or all of the xcoll, so that when you find a way out via whatever means, that you arent stuck with that mess.

Having had much experience at failed xcoll breaks with St George ( and other lenders) it may take many months to resolve, so the sooner you get into it the better.

ta
rolf

Thanks so Rolf. So long as it can be done I will get on to it... I am trying to untangle all this now so that in a few months when we find the right house we can take the next step and have the financial structure worked out.

Just been through the un X scenario with St.G 5 properties X to one loan, now 2 to one loan and the other 3 all free. You need to contact a valuer that is St.G approved. Get the valuations and if the equity is enough un X. I actually got St.G to pay for the valuations.

Then try other places including WPac. For some reason the WP guys seem to like taking St.G clients even though same group.

Also after negotiations recently broke down with St.G regarding % rates I went looking elsewhere and have been approved by 2 others to take over the loans at better rates than St.G would offer.

Ok thanks for that. We have a couple of loans that are still fixed with SGB: Not sure what security/ies they are attached to but 1 loan is about 100K the other is about 50K...so given they are small we could consider paying break costs. The other loans are variable so should be able to break free I hope.

Do I ring SGB and ask them for the valuer they use? I'm not sure they will pay as they told me they will not request valuations if the income issue is not satisfied.

I was dumped by st george too! so i went citi bank, great lo doc's and they have not missed a beat!

I have been looking at a group called Pacific Mortgage Group, underwritten by Citibank I think. They were in Your Mortgage Mag and won best investor loan. Quite low rates.



Just wondering though,

1. how do I get SGB to do the vals? They know that I am looking elsewhere but don't seem perturbed by that (despite our perfect credit rating etc. they are not trying to keep a 'good' customer).

2. Should I now hand over to a good MG to manage the untangling of X-coll? I am home a lot to make phone calls but find it all quite overwhelming.

3. Should I still look into, say, PMG for one of their low doc loans? Or WBC?

4. Should I pay break costs on the approx 150K and move everything to another bank or banks?

Many thanks for the advice. It is much appreciated,
M

 

[Rolf Latham]

Chase down a good broker for a some detail suggestions....................I ca feel your mind is a bit of a whirlwind at the moment.

Consider your options well before stirring up more dust on your CRAA file.

The St George not caring much isnt unique to them BTW.

ta
rolf

 

[Dragon]

I don't know the full details ( obviously ), but I am saddened to read this situation.

My personal view is that we should support our existing customers, but if your request is too far outside our policies, then even the best support will not allow credit to be advanced.

I would take the suggestions already given, there are some good mortgage brokers on this board who could assist.

In terms of accessing your equity , lenders have the ability to do an increase without re-checking income - ask if this is possible in your situaiton. This may not help with the new purchase via St George, but may make it less painful to get your deposit sorted.

In our defense, if we cannot lend to you due to income reasons, then you will probably have the same issues with other lenders. I am all for supporting clients, but support sometimes means that we lend responsibly as well.

Hope it works out for you.