Question for the brokers

I have an Indian couple staying in one of my Airbnb flats who have permanent residency and looking to stay. They are keen to buy something and like the inner west. They're just looking for a flat - one bedder.
One of them is starting a Masters degree soon, and the other is looking for work - IT, of course.
I've looked at a couple of tiny flats with them - I don't mind doing that sort of thing. Their budget is $380K including SD and other costs. I quizzed them on that and said they won't get much for that sort of money and I asked them how they came up with the figure.
It turns out that they have $380K in the bank, but without a job they assume they can't get a loan. The irony is that if they put down a $350K deposit (keeping some funds in reserve in an offset account) and bought a place at the next price point up, around $420, the interest on that borrowed $70K would be about one fifth of the rent they are paying me.
Any suggestions?

Scott
 
Without an income it's going to be tough. How are they paying the bills at the moment (Rhetorical question, obvious answer is via their savings until they do get a job).

They might be able to purchase the property as a rental and use the rent as serviceability, but this is along shot.

With that kind of deposit, they'll only need to be employed for one pay cycle, some lenders would do it on a contract even if the borrower hasn't started.

They probably don't need much income to service. Any chance of getting another job whilst still looking for something more permanent?
 
Are either working at all? Part-time / casual?

Without income how can they show they can support the debt. I would be suggesting they wait until 1 of them is working, with 1 of them earning say $50,000 should be able to borrow around $200k.
 
You're a good egg scott, this sort of assistance can be a huge help to people, especially recent migrants who are adjusting to a new system
 
Agree with the other guys - no income = no loan.

Should be right once they land a job - especially given the low LVR that they require. Brady and his CBA mates would happily take their custom :)

Cheers

Jamie
 
You're a good egg scott, this sort of assistance can be a huge help to people, especially recent migrants who are adjusting to a new system

Not much possible without income Scott. Agree with Sanj, good on you for trying to help them out. :)
 
Thanks all. I thought that might be the case. He's a high end IT guy - something to with data bases, I think - and those jobs at that level are thin on the ground here. I'll tell him to get a job, any job, just to get a loan.
It would make much more sense for him to borrow $200K or so and keep as much of their own money in reserve as possible.

Scott
 
Agreed good on you for helping them out.
Bit of a stereotypical statement though (Indian = IT):)
I'm an IT manager and my team and I are all very much Aussie.
I will say though when I advertised the helpdesk position there were about 60 applicants where I was unable to pronounce the name.
 
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Go To The Bank.

G'Day Scott

As Pete said, there are some lenders which will lend on the rent servicing the debt

For deals like this, they are often best to walk in to the branch where they bank and talk to the branch manager or failing that, the loans officer.

If they have brought money from overseas it is likely to be one of the Big Four, which all have very encouraging credit policy when it comes to new Australians.

I have new neighbours two doors along, who waited eight years for their Immigration / Permanent Residency permits to come through, and they have a pre-approval for a home loan.

I would not usually suggest the local Branch, but for deals like this I would suggest it is in the best interest of the customer to find a bank manager they trust can actually do the deal and then work with them

Hope this helps
Kristine
 
I would not usually suggest the local Branch, but for deals like this I would suggest it is in the best interest of the customer to find a bank manager they trust can actually do the deal and then work with them

Hope this helps
Kristine

Intetesting statement.

May I ask why as at the end of the day the same credit criteria will apply.
 
Sauce for the Goose

G'day Colin

Well, I've been in this business for a while now and thought that there was a level playing field in that the branches had to abide by the same credit and lending policy as the brokers

But, I recently did a lot of work for a customer in Tasmania where the spouse was the bread winner but had not yet been granted permanent residency, and I checked and double checked with the credit department who originally said they could take the deal but later, would not budge that she had to have permanent residency. Happy days, the husband walked into the local branch, put her payslips on the table and got the loan. Yoh.

I did a serious amount of work for a purchase in a development near you (does split contract ring a bell?). The job came to me from a one brand mobile lender, I had three strong applications for it including with a lender which had settled one of the townhouses, all lenders with promises that the security would be acceptable, but it wasn't, and I eventually passed the file on to a Perth broker who had also settled in that particular development but that lender, too, declined the security, but I heard today that the customer walked into the local branch of the first lender I had put the deal to, who had declined after valuation, and yet settled with them.

I have now referred the matter to my BDM who was extremely helpful in the first instance and who will not doubt follow this through ... good luck to the customer but that first refusal put her through the wringer and it now seems, quite unnecessarily!

So that is one temporary visa and one split contract where it was all hands to the pump and yet the credit teams were incapable of working with the situation due to intractable credit policy, but hey presto! delegated lending authority got both of these deals through when according to the credit teams, neither should have been approved.

So I wish I could say that the same credit policy would apply, but these two recent experiences of mine would indicate that in times of low lending perhaps a blind eye is being turned to the branch whereas the eagle eye is still trained on to the brokers

I would like to think that it isn't so.

Cheers
Kristine
 
Thanks for the detailed reply. I feel your pain.

Hopefully you get paid on both deals as thats soooo not fair.

I sometimes think the branches leave details out I mean forget stuff!
 
Thanks for the detailed reply. I feel your pain.

Hopefully you get paid on both deals as thats soooo not fair.

I sometimes think the branches leave details out I mean forget stuff!

Sorry Colin?

Get paid? By whom and for what?

As a broker, I get paid six to eight weeks after settlement. If the deal doesn't settle, who would pay me?

Nope, I just have to deal with it, but that doesn't mean that it doesn't matter.

Cheers
Kristine
 
If I where in your shoes and placed a deal with a bank and got declined whilst the same bank approved the deal at branch level I would personally insist on being paid upfront and trail.
 
Thanks for your suggestions Colin

I hope Scott's tenants are able to get their flat without too much trouble

They sound well resourced and well prepared and as New Australians deserve to be made welcome!

Regards
Kristine
 
This happens a lot in the commercial space/ business loans and with private banking....

3 words- DUA.

Give DUA to a sale staff ie lending manger at the branch or a private banker...and deals just gores through with MIN or no checks in some instances...
 
If I where in your shoes and placed a deal with a bank and got declined whilst the same bank approved the deal at branch level I would personally insist on being paid upfront and trail.

This is funny, I've had this happen a few times. In each case the details weren't correct by the broker, be it income, expenses, assets, liabilities or little extra things that get it over the line.

Happy if the bank wants to pay both but I don't think it right, if deal wasn't done because didn't get it right. Completely understand when deal is exactly the same, but I've NEVER seen the deal exactly the same approved after being declined. Infact my there is a policy/agreement in place that the credit officer/manager/team who originally declined the deal must approve the new application, so same person assessing.

In out of the box senarios that require credit approval, this is where having a good relationship with different credit officers/managers is vital.
 
Fortunately this sort of thing doesn't happen so much any more, but it does still occur. There was a time (pre regulation) where the branches did have substantially more ability to get loans approved than the broker channel. Most lenders have consolidated their assessment policies these days, knowing that the broker channel is as valuable to them as than their own internal channels.

I do agree with Colin however, Kristine you should lobby your BDM to get paid for the deals. Some lenders can be quite accommodating with this (some not so much). Either does send them and the credit team a message.

Brady I do agree that if the broker hasn't presented the deal properly they haven't done the job right. However a policy exception on a visa isn't a case of broker incompetence.
 
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