Hypothetical conundrum

Hello all,

Im interested to know the outcome/s of this totally hypothetical situation.

A couple applies for a residential loan to build multiple townhouses. Conditional approval is granted. Servicing is tight but just scrapes though.
During the application process one of the parties falls pregnant.
The council approvals process is dragged out over many months. By the time all is approved and bank package is sent for valuation, there is a little addition to this hypothetical family.
Valuation comes back over and above expected but a good 3 months has past since payslips etc have been sent and one party is on government paid maternity leave (12 months).

Hypothetically… where to from here?

What’s the likelihood of being asked for updates payslips?
Is there a way around the serviceability issue (now with an extra dependent) which was already tight to begin with?
What are the options?

 

100% updated payslips will be required no way around it. (If it really took that long it's likely the conditional approval would be expired anyway)
Depending on the lender, serviceability might not be a problem even though Mum's on maternity leave - depends if they have a set return to work date and on the return to work income level and the lenders specific maternity leave policy.
Increased Valuation should mean increased rental income amount, which will assist serviceability.

 

Along with an additional dependent and serviceability which was very tight to begin with. Not sure if I’m this situation it would be enough to get across the line.

 

Updated payslips will be asked for sure.

Since your approval has lapsed it will be a new application regardless, if this is the case then you'd want to consider reapplying to a lender that had a good Mat Leave policy.

 

First up, congrats on the hypothetical baby.
Secondly, good time to ditch the smokes in your avatar. Coffee is ok.

 

Cigarettes are long gone. Like the disfunctional girlfriend who was good in bed but was always bad for you.

 

And I see now how that hypothetical conundrum could become less hypothetical….

 

Being on mat leave isn't a deal breaker like everyone thinks it is. Some lenders have great policies where if the applicant on mat leave can provide an employment letter stating a return to work date and if the applicants can show some cash to cover the servicing shortfall then should be all good to proceed.

For example, if using the mat leave income they fail servicing by $1,200 a month. Then if the applicants can show $24,000 ($1,200 x 12 months) in savings outside the required funds to complete the purchase then it should be all good as long as it can still service with a dependent.

 

Ok this is good. In this hypothetical situation the cash in the offset would equal the applicants yearly net income.

 

Without the actual figures and having a broker run the scenario for real then you could say this or you could say 'hypothetically' you'll be fine- depends on how you look at it, it's all hypothetical anyway right?

 

Which bank is this?

Many of the townie construction non-banks wont take maternity leave income into consideration (at all or shaded significantly). They don't play by the same policy toolkit as bigger players here.

 

I didn't think pregnancy necessarily meant a change 8n income.

I can't get pregnant ( they didn't say why )

Is there a way one of the income earners could avoid becoming pregnant? Block the chimny or something.

Who's been pregnant before?

 

Hi Redom,

I’ll PM you the details.

cheers