PPOR Financing Conundrum

Discussion in 'Loans & Mortgage Brokers' started by hdb, 8th Nov, 2019.

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  1. hdb

    hdb Active Member

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    **Apologies for the length but I wanted to give a complete picture**
    Ok team, looking for some wisdom on best path to take. We're hoping to buy a property (house preferably) in Eltham VIC area as primary residence for next 15-20 years. It's taken us a while to make progress since I am self-employed and my ABN just turned 2 a month ago, which caused funders to turn their nose up when we first applied via a broker in August. My wife is on PAYG with a stable job and I have long term engagements in tech consulting; I've actually been self-employed since 2001 in 3 different countries so not new to the game. No debt, both in early 50s, one kid finishing Year 12 in a fortnight and then heading overseas for a gap year. We're currently renting and have flexible timing on settlement etc.

    Since we knew finance could be complicated, we wanted to get things organised before we made any offers. After 3 weeks of back and forth, we got conditional approval yesterday from UBank for $650K and have ~$325-350K to put on deposit/stamp etc. (leaving some cash in reserve), so now we can target houses to ~$950K but no higher. We're finding that the market in that area is moving up and we're potentially hitting the top of our range pretty quickly. The only conditions specified are valuation and contract of sale.

    UBank is known to be conservative and had been signalling that they were potentially going to give us a lot less (~$500K) which wouldn't have been useful, so we started conversations with a broker about options. He is indicating that we could get approved for $800-850K through his funders (no specific names given) but it will take a few weeks. He's seen all of our documentation and understands our situation so I expect his range is accurate. He knows about UBank and where we stand. Having to wait a few more weeks isn't great, especially at this time of year, but we're not in a huge rush and can be patient if best.

    Question: Are there any downsides to continuing with the broker to see if we can get approved for the higher amounts? They would expand our options a good bit.
    There are two credit checks on our file: one from August when the first broker put us into ANZ and they knocked us back on my ABN's age and the second from UBank for this conditional approval. I don't want to waste the broker's time if the prior activity is going to have a big impact.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    This is a question you should ask the broker directly... Have you mentioned the previous and current applications to them?
    Can't see any downsides to getting a better borrowing capacity.
    I suspect it won't be wasting the broker's time but two credit hits in a short period just needs to be explained upfront to the broker so they can manage it with any potential lenders.
    Speaking from a brokers perspective there's nothing worse than not knowing about these things until you do a credit check or submit an application.
     
  3. The Y-man

    The Y-man Moderator Staff Member

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    Could you elaborate on this?
    Doesn't make sense to me.

    The Y-man
     
  4. hdb

    hdb Active Member

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    Thanks - yes, I have kept the broker fully in the loop and talked through everything that has happened. We're scheduled to sit down face to face next week after several extensive phone conversations and supply of all documents.

    The reason we expect the difference in loan amounts is that UBank looked back at my ITRs from 2017 and 2018 and excluded all income from before my company, even though the clients etc are the same. This brought my average income down significantly on a calendar year basis. Other lenders apparently are more flexible.
     
  5. hdb

    hdb Active Member

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    That is how UBank described it in their email stating "Conditional Approval" - I agree that it is a strange way to specify conditions since we haven't picked a property yet.
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    If the broker isn't concerned about it then no reason you should be.

    Standard when you haven't found a property yet, basically just means you're approved, subject to you finding a suitable property and the bank valuation for that property turns out all OK
     
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  7. hdb

    hdb Active Member

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    Sounds good - While we've bought and sold property in the US and NZ, this is our first time going through the process here and it's been a learning experience.. Apparently the RC has added all sorts of "fun" :confused:
     
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  8. The Y-man

    The Y-man Moderator Staff Member

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    Thanks - just clicked that it is "their conditions" not "yours" :)

    The Y-man
     
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  9. hdb

    hdb Active Member

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    The only condition I have is that my wife must like it.. If she's not happy then nobody is happy... :(
     
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  10. Lindsay_W

    Lindsay_W Well-Known Member

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    It's true what they say - Happy wife = happy life :D
     

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