Accountant letter requirement when topping up loan.

Discussion in 'Loans & Mortgage Brokers' started by dsman, 13th Nov, 2019.

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  1. dsman

    dsman Well-Known Member

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    Hi,
    Just had a meeting with my bank's home loan specialist.
    I'm applying to top up my existing home loan with the bank.
    The decision was, best way is to top it up as a new loan for investment in shares.

    I was told that I need to get an Accountant to write a letter saying I'm investing in shares for the new loan.
    The reason is more like the bank want the client to understand the tax side of it.

    Problem is I never use an accountant for my tax return. With online tax return these days is so easy to do it your self.

    If I engaged a new accountant now just to write a letter (i'm willing to pay for it) will they even feel comfortable to write such letter?

    Just wanting to know if this is normal process?

    Thanks for any advice in this matter.
     
    Last edited: 13th Nov, 2019
  2. Morgs

    Morgs Well-Known Member Business Member

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    Not all lenders have the same policy in regards to top up / cash out / equity release. You may want to consider moving to one that'll allow you to do what you're actually trying to achieve rather than down the rabbit hole....
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    They want you to lie to the bank?

    Accountants should not write such letters because they are not qualified or licensed to do so and their insurance won't cover it. Banks shouldn't ask either.
     
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  4. dsman

    dsman Well-Known Member

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    Ok Let me clarify this is not lying to anyone..
    The additional loan is basically using your equity from your property.
    And the loan is for share investment.

    The letter is required from Accountant for some reason... It's not something under the table or anything like that.

    I was at the branch and he even confirmed with his manager. etc.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Do you intend to invest in shares?
     
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  6. dsman

    dsman Well-Known Member

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    At this point in time most likely but plan can change and see how the market is. etc.

    My question is why the letter? How can an accountant letter helps and why would any accountant would want write such letter?

    Hence my question, is this normal process?

    The new loan is an investment loan link to my oo loan.
     
  7. Lindsay_W

    Lindsay_W Well-Known Member

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    Going to your existing banker was a mistake, get a Broker ASAP
    Not all lenders require a reason to release equity
     
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    It's normal for certain lenders, it's their way of covering themselves if you go spend the money on a boat for example and end up defaulting on the loan/ they get audited etc.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Some lenders are a bit ridiculous with their cash out requirements, they want things like accountants letters to verify that you've had advice on what you're doing (never mind that an accountant is likely to be licensed to give advice on shares).

    There may be alternate ways to address this problem, or it may simply be easier to go to a more appropriate lender.
     
  10. dsman

    dsman Well-Known Member

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    Thanks. Yeah,, look like for my lender you need a reason to take a loan even if you can afford it and your collateral is significantly more than suffice cover it.

    I wonder would any accountant put themselves on the line to write me such letter?
     
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  11. dsman

    dsman Well-Known Member

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    Yeah I think that's what they are doing.
    I ask could I just speak to your financial planner and he/she can then write me a letter that I "know what I'm doing".
    They say no.
    LOL I guess before royal commision they would gladly do that.
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Perhaps a stat dec stating that you understand what you're doing as well as the risks and consequences involved?

    We can't give you the ideal answer as we don't know the nuances of your circumstances. Have you spoken with the banker, described your circumstances and asked what alternatives would be useful?
     
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  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The bank is trying to cover themselves considering the responsible lending criteria. It might be irresponsible for a bank to lend a borrow money without a purpose.

    No accountant would want to write such a letter because
    a) they would not be legally able to, and
    b) they would not know what you want to do with the borrowed money, and
    c) they would not want to be dragged into a fraud.

    A financial planner would be the person the banks should be seeking a letter from.

    But there are accountants out there that will write such letters - for a fee of course.
     
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  14. dsman

    dsman Well-Known Member

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    Thanks all. I will push back to my lender. I won't bother even to go find an accountant.
    Come to think of it now, its really a silly request!
     
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  15. MRO

    MRO Well-Known Member

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    Dear Bank

    My client has informed me he would like to buy some shares and has requested a loan from you.

    Kind regards
    Accountant
     
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  16. Brady

    Brady Well-Known Member

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    I liked @Peter_Tersteeg suggestion of the Stat Dec - maybe do that and provide it to them.
    Something along the lines confirming what your intentions are for the funds, should tick the banks liability boxes :)
     
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  17. MC1

    MC1 Well-Known Member

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    Stat Dec
     
  18. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I question how its an accountants ability to forecast what a person will do with borrowed money.

    Dear Bank

    Tommy doesnt have a job or any prospects of getting one but he tells me he would be a great person to lend to. He tells me he will soon have a job earning $400,000 a year.

    His Accountant
     
  19. Twisterflake

    Twisterflake Member

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    Any updates on this?

    I've just been told that I need a letter from a financial planner for a top up loan. My intention is to buy shares but if the market is too volatile, to renovate the house.

    (If any financial planners can help, please PM me)
     
  20. Mike A

    Mike A Accountant

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    only those who are foolish enough to do so