Change for self employed home loan applicants?

Discussion in 'Loans & Mortgage Brokers' started by captainredbeard, 2nd Apr, 2019.

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  1. captainredbeard

    captainredbeard Member

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    I have a friend (no, I swear it's not me!) who is self employed and has bought a block of land. Their original plan was to get a construction loan and build towards the end of the year.

    Their broker has told them that there are changes being in mid-April that will make it harder for sole traders and self employed applicants to get a home loan, so they should bring their timeline forward and apply now.

    I haven't heard of any industry wide changes, and I can't find anything on the forums or by googling. Does anyone know anything about this?

    At the moment I'm thinking the broker may be talking about a lending policy change with the bank my friend is with, but not an industry wide change. Any other guesses?
     
  2. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Nothing that I know of.
     
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  3. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    Maybe having to provide 2018 tax returns? Or the broker needs the cash flow ;)
     
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  4. Eric Wu

    Eric Wu Mortgage Broker

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    haven't heard anythings so far.
     
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  5. captainredbeard

    captainredbeard Member

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    Thank you everyone for your quick replies! Sounds like there's something else going on here. I'll get my friend to ask for more specific details and make sure it's not the broker needing cash flow!
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    It's probably the tax returns. Most lenders already want the 2018 returns, only a few exceptions don't want them yet. Your friend might have strong returns for 2017 but the 2018 returns aren't as good, hence brining the application forward would be to their advantage.

    I don't think I've seen any specific policy changes that make things harder for quite some time now, other than continuous tweeking of living expenses.
     
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  7. tobe

    tobe Well-Known Member

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    Could be the rams changed to low doc... they are happening mid April.
     
  8. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Yep it would be Rams low doc for sure goooooone
     
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  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I haven't heard anything in particular...unless it's the Rams issue mentioned by the guys above.

    Long story short - obtaining a loan when self employed isn't an issue if you've got a couple of years returns, can demonstrate an ability to service the debt and have a sufficient deposit.

    Cheers

    Jamie
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    on the RAMS thing, quite interesting where their business looks to be flowing

    RAMS isnt just a mono product fran, and are actually brokers too.

    RAMS aggregates through the same agg as we do, and we have seen them going from below 10th in volumes, vs now number one in QLD for our agg

    ta
    rolf
     
  11. tobe

    tobe Well-Known Member

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    I heard they were directed to start writing thru their aggregator after westpac withdrew their own assessment team. Rams deals get assessed in Adelaide same as westpac st George and bank of Melbourne.
    Can’t understand why franchisees hang around. The main advantage was .75 upfront and .25 trail. Writing thru the aggregator they average .65 and .15 and they got to pay the rams marketing split along with the rent on a high profile retail office etc.
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    there u go :)

    Things change I guess

    we used to get a decent upfront split on Rams product, they had some nice niches

    ta
    rolf
     
  13. Angelar

    Angelar Active Member

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    What's the cut off date for not needing to provide 2018 returns for self employed?
     
  14. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Hearing some Rams franchises are seeking legal advice as were sold franchises based on certain niches which have been pulled. Some franchises were doing ridiculous numbers off the back of the SE / low doc product as well. $70M a month kind of numbers mostly broker referrals.To be honest surprised that product lasted as long as it did.
     
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  15. Terry_w

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

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    that is the problem when you do something others won't do, you end up top heavy in that area, which creates added risk
     
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  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    live by the subsidy

    die by the subsidy

    ta

    rolf