Effect of Loan Deferral on new Application

Discussion in 'Loans & Mortgage Brokers' started by Carol M, 3rd Apr, 2020.

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  1. Carol M

    Carol M Well-Known Member

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    Hi there,
    Just wondering what impact a 3 month loan deferral due to lack of rent from Resi tenants losing job would have on an application to purchase a new property in - say 6 months.
    Was planning to purchase an investment property this year, using equity for a 20% deposit.
    As tenants have lost jobs and are paying less rent, am tempted to ask for a 3 month loan deferral, rather than scrounge the loan payments myself.
    But I am concerned this may dampen banks view of me as a good candidate for a new investment loan in 6 months. My job income is still good, but loss of rental income of course makes things harder.
    Assuming tenants get jobs back within a few months (or get Jobseeker payments etc) and rent starts to flow again, improving my serviceability .....
    Any word on how banks will view people who have accepted a loan deferral??
    Also, will this impact credit history or credit score??
    Thanks
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    history and score probs no

    But one would have a better chance of an approval with lender X, rather then the exisiting

    ta
    rlf
     
  3. Terry_w

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

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    Yes I think it would effect new apps because by taking a repayment holiday you are saying you are affected.
     
    Last edited: 4th Apr, 2020
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Confirmed with a number of banks - if you're taking a repayment holiday it's because you supposedly need financial assistance - they will not lend new money to you while you're on a repayment holiday for an existing loan
     
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  5. Terry_w

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

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    This makes sense.
     
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  6. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    I can also confirm. If you're using a financial assistance package, other lenders aren't going to want to do anything that may put you under additional financial stress, so don't even think about seeking more finance.
     
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  7. SarahSydney

    SarahSydney Member

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    Pete do you think will carry forward for a period of time after the repayment holiday? Like a bad credit mark on your file post ‘financial hardship’
     
  8. wilso8948

    wilso8948 Well-Known Member

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    And after the deferral is complete?
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    logical - very

    But some want both the bread buttered both sides

    ta
    rolf
     
  10. Carol M

    Carol M Well-Known Member

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    To clarify - I would not imagine any bank would loan to me while under a deferral period. My query was what their view would be AFTER deferral period finished, eg 6 months after, assuming normal rent had resumed, and my serviceability was OK otherwise.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    no issues as at today

    ta
    rolf
     
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  12. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    In the long run after the deferral period, when you're back in work and the economy is in recovery mode, I don't think lenders will care too much if you've used the deferral period.

    There will likely be a period where lenders are cautious about certain jobs. They're probably going to want to see that a business starting up again is financially stable. It wouldn't surprise me if some lenders wanted to see 6 months in the same job before they lend.
     
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