Borrowing capacity and evidence of income

Terry and Trainee: I have no idea. The previous lawyer also did not consider asking him for more information. I thought this is relevant so I thought I will ask here.

 

What is your relationship to the parties then?

 

Family.

 

To 'quote', hit the reply link under the person's post.

In the context of your thread regarding buying property after a separation, it looks like the ex has purchased a commercial property.

Whilst most lenders will follow similar guidelines to residential property, commercial property isn't regulated under the same rules. It is possible (but incredibly expensive) to get a loan on a commercial property without proving income if you've got a large enough deposit.

This is where the line between reputable lender and loan-shark becomes a little fuzzy. I can see various ways of borrowing money if the circumstances are right, but it comes at a cost.

Personally I wouldn't want any financial connection to someone going to the dark side of lending. In my observations, it usually doesn't end well.

 

Here's a sample of the sort of no-doc loan email I get every few days...



A couple of things to note:
* The rate of 8.95% is over double what you can get on a regular loan for the same purposes. I suspect this is charged in advance.
* "No NCCP loans", means it doesn't fall under the existing credit protection. This means that there's little to protect the consumer if things go wrong, but the lender can be a LOT more flexible, they don't need to prove income. This is also why they're saying, "Company Borrowers".
* The loan term is a maximum of 2 years. The borrower had better have an exit strategy by that time.

 

Thanks

It is for a residential property from a bank and the loan term is 30 years. 20% down payment and interest rate is 4%

 

If someone is getting a loan approved under those circumstances with no income, then someone's gaming the system.

 

Hi - have since found out that the company/guarantor is 100% owned by him. So the fact that the bank accepted this company as a guarantor must mean that the company makes enough profits and cash flows to pay the monthly instalments. Thanks

 

The banks do not accept a company as guarantor. they would have relied on the income of the company.

 

Is there a associated party issue to this arrangement ? eg a mate has given appearance of lending 100% and in fact hubby has some private deal to share property but is the sole one on title? A title search will show who the mortgage is held by. If its not a major lender it could even be a private arrangement. If so maybe he is trying to portray a lack of net assets through a contrived scheme. If its dilapidated I assume he is attempting to develop this ? Lenders normally wont lend on property like this without other means. The property cant produce income as it stands and few lenders will lend on development land without demonstrating capacity in other ways.

All this could be explored by the family law adviser you will need in any event. Wouldnt be the first time I have seen a crude attempt to portray poverty but acquiring a $1.8m property has to raise eyebrows.

 

Could be a new spouse in there somewhere too.

Find someone who already owns and operates a successful company. cozy up, then apply for a new loan. The loan could be joint, or it might be sole with the new spouse providing a guarantee