Resimac wants company guarantee

Discussion in 'Loans & Mortgage Brokers' started by PeterW, 9th Nov, 2019.

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  1. PeterW

    PeterW Well-Known Member

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    I am a PAYG, my wife self-employed in her own Pty Ltd company. We've borrowed a lot with banks and have reached serviceability limits there. As such we have looked at non-banks, and received conditional approval from Resimac. However, the approval comes with a series of conditions, the most onerous being for my wife's company to provide a guarantee for the loan.

    This of course irks me so I objected, however Resimac stands by this requirement. Their rationale being my wife's company's profit (not only the wages it pays my wife) is being used in serviceability.

    The loan, which is a cash-out loan to be secured by an existing unencumbered property of ours, will have an LVR < 60%. I have never heard of a residential loan requiring a company guarantee. I would baulk and move on however the deal as cash-out at 3.51% IO for 10 years is going to be ~ 40bps better than Pepper et al, and all the paperwork is already done.

    So, what to do? What are the risks to my wife's company of providing a guarantee? The company presently has no debt. If we wanted it to borrow in future (unlikely but not impossible) would it be hindered?
     
  2. Terry_w

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

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    Get some tax advice on div7A issues too
     
  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Company has retained profits and you are using the profits for servicing purposes.

    Most of the smaller lenders will require a guarantee from the company - larger lenders will not.

    No issues from a further borrowing capacity perspective.

    As a side note - one of the benefits of Resimac is that they do not factor in company liabilities into servicing even if you are using company profits for servicing purposes.

    Not saying this is relevant to your situation but good for other people who are in this situation to know - if a company has a lot of liabilities such as a bunch of high EF facilities then Resimac is an excellent option.

    Bottom line - looks like your broker knows what they are doing.