​Lucy and John contacted our office as they wanted to upgrade from their current home. They were 58 and 62, still working and in good health. “Are we too old to increase our home loan?” They asked. “We need a bigger home closer to town as the kids are older now, but still living at home while going to university”. They had a mortgage, but it would need to be increased to pay for the upgrade.
 
Banks and lenders like to make sure that they aren’t getting you into a debt that you won’t be able to repay in retirement. When is retirement? Well, that’s a grey area isn’t it? (Excuse the pun!)  In our industry we talk about a clients ‘exit strategy’. An exit strategy is basically an explanation to the bank as to how you will afford a mortgage, or pay out your mortgage when you retire. Exit strategies are particularly important for clients approaching retirement age yet still requiring a thirty year home loan term for affordability reasons. If you want a 30 year loan term and you will be 92 at the end of it, we will need to sell the bank your ‘exit strategy’.
 
We spoke to Lucy and John about their plans for this. “How much longer do you plan to work for?”
 
“Well, we both feel we want to work for at least another ten years each, but we still want a 30 year loan term because we have an investment property we will sell to pay off all our home loans at that time” said John.  Furthermore, we realised that they would have substantially more invested in super after ten years working. We diarised all of this for our credit officer so that they would be able to see how the client could still justify a thirty year loan term.
 
Of course, it’s not that simple for everyone. Some clients don’t have assets or super to lean on and will need to seriously consider a shorter loan term in order to obtain approval.
 
Many clients do not have a financial plan laid out, and only a basic understanding of what assets they hope to have in place when they retire. In order to find out how much you can borrow now, and plan for your future, why not see one of our mortgage brokers and our financial planner to work out a plan for your future? 

​Sally, a single mother, had moved to a warmer climate to follow her dream of raising her family by the ocean. Once settled with work and school routines, Sally desired a home of their own to nest into. She wanted to move away from the insecurity of the rental market, so that the kids could paint the walls or accidentally put holes in them!
 
Sally owned a house back in her native Canberra, which she was now renting. Though Sally could pay her current mortgage costs, she did not have enough savings to buy a second house in her new hometown. She didn’t want to go through the home loan application process again, besides, she liked her home loan. Enquiries had suggested that re-approving would mean she had to pay lenders mortgage insurance fees again. Sally thought wistfully ‘if only I could move my house’.
 
She resigned herself to rental life and would have gone on in this way indefinitely, had it not been for bumping into her friend and broker Liz. As Sally explained her situation, Liz shook her head. "You do have options, Sally!" Sally looked surprised. "Really? What are they?"
 
"Two words" Liz said. "Portability feature".
 
Porting loans is a little known feature that most loans have written into the loan contract. Many banks will allow you to ‘port’ your mortgage from one property to another. Portability generally avoids a new financial assessment or new loan fees. The benefit of this is that you are able to keep the terms and rates of your original loan.
 
There are clauses to be aware of, however. A major condition is that both the sales of the old home and the purchase of the new home must happen at the same time, or prior to the purchase of the new home. Porting is NOT bridging finance. The loan's original loan to value ratio and amount must not increase. For Sally, this meant finding a home that was of roughly equal or lesser value than her Canberra house. Sally would have to cover the sale and purchase costs, or have this covered within the sale price. Porting is therefore, a brilliant solution for down sizers.
 
Sally was thrilled. She started looking for a local home for herself and her boys, and soon found one that suited their needs perfectly. Luckily the value of the home was less than her Canberra house, which meant her loan value was decreasing even after sale fees and stamp duty costs. Porting her loan would be no issue; she put her Canberra house on the market, and put in an offer on the new house. We submitted the paperwork to her lender to start the process.
 
Sally and her boys were finally able to leave the rental market and gain the security of the family home she longed for.
 
Important notes:
 
In some cases if the two properties aren’t going to settle at the same time, the client MUST sell their home first, and port the loan dollar for dollar against a term deposit before moving it to the new property.  If the reverse were true, porting would not be an option as the client would need bridging finance. If this sounds like a feature you'd like to explore, please call our brokers today for more information and advice!

Steve wanted to upgrade his work ute.  It was old, business was booming and he knew his old ute wasn’t doing him any favours getting new work. The old Triton couldn’t keep up with the demand of his growing and successful business and  he needed more towing capacity, as well as a larger tray to fit more machinery. The problem was, the quote from the car yard for a trade in wouldn’t even cover how much he owed.
 
“Liz, what do I do?! I thought I’d get heaps more on the car but the trade in quote means I’ll still have a few grand left owing on the truck with Capital!”

Trading in your car can be an exciting time, new wheels means more capacity to do more work. You can’t help but feel like your business is doing you proud when it can afford shiny new equipment and investing in your business is investing in your future.
 
The issue is that cars are losing their value faster than ever: “Steve, cars are devaluing faster than ever, so we have to be careful that when we finance this upgrade we take this into account!”

Cars are devaluing faster – particularly some makes here is a great link to explain some of these issues. http://wealthartisan.com/why-do-new-cars-depreciate-sharply/
 
I asked Steve “Did you put a large balloon payment to the end of your term?”

“Yeah I seem to recall I did.  I didn’t put any deposit down at the time either.  The other thing is, I’ve put tons of clicks on the car as there have been lots of jobs out of town. I’ve really worn the old thing out to be honest.”
 
“Ok” I said, “that’s fine, and perfectly normal, but now that you’re trading in and upgrading,  the wear and tear means you’re getting less than what you owe on it. This is called negative equity. “
 
I explained to Steve that we’d be able to roll the remaining debt owing into the new finance with no issues, but we were going to build in a smaller residual this time, and accelerate his repayments so that he wouldn’t fall into the same trap. We only allocated 15% to the balloon instead of the normal 30% as he really wears his cars down.  Given rates had dropped so much since his last car finance the repayment was only $40 per month more. “Gee that’s ok, and now I can rest assured this won’t happen again in 5 years as I’ll be ahead in my repayments!”
 
We like to know how your business operates so that we can understand and strategize your finances in advance. Simple tweaks like this won’t be noticed over the short term, but can deliver benefits at upgrade time by not punching you in the wallet!
 
Wilson Financial, we understand the fine print so you don’t have to.

​For Lockie, it was time. Time to buy his first home! His first port of call was the bank. "We need you to prove you have genuine savings," was their response. Lockie, being the kind of bloke that he was, nodded wisely, but left the meeting utterly confused. He found us soon after. "Ok, so I need advice. What the heck are genuine savings? What does that even mean? You gotta give it to me straight!"
 
Those two words that provide the magical gateway to many a home loan approval; Genuine Savings. What it means, is that the bank wants to know that you have the capacity to save. This means keeping money saved in an account for three months or more. Do this, and the bank will deem you to be a lower risk client. Genuine Savings are  important for:

• People without equity in another property
• Low deposit home loans where the borrower is putting in the minimal 5 - 10% deposit.

For Lockie, as a first home buyer, this was his situation exactly. 

"Well that’s fair enough really! I can do that!' Lockie replied. We laughed, sitting him back in the seat. 
 
"Genuine Savings can't be choppy. What that means, is that you can't put $2000 in, then a short time later, take $2000 out. $5000 in, and then $3000 out…that sort of thing. Sure, a lot may be going in, but a lot is also going out. Genuine Savings looks more like steady growth in the total amount, through repeated deposits only."

This is an example of choppy NON genuine savings. 

A lightbulb went off for Lockie "Oh ok, so I really should have a separate account for this shouldn't I?" he said.

"Yes, it can't look like slowly saving $500 per week over a few months, and then at the last minute, dump in $10,000 from selling an asset or a sudden windfall. The windfall portion won't be considered 'genuine'!"
 
"But…" he trailed off, a bit exasperated. "What about the savings I already have? It's taken me a fair while to save it up, but I did get wiped out when I bought a car a month ago.  Don't tell me I have to start all over again!?" He slumped, his dreams of soon owning a home threatened.
 
"It's ok, since you started saving after the car purchase, will count as one months genuine savings, so you just have two more to go" we reassured him.

Below is a perfect example of how genuine savings should look but please note, plateaus are also ok.

​Also, if you do get a lump sum, you can simply stick it in the bank for three months and if you haven't touched it, or even grown on it, the bank will deem it Genuine Savings, because you've proven your ability to hold on to it and save. Believe it or not, that’s really hard for many people!

Today I discussed with our financial planner George, an interesting story about how we can advocate for our clients insurance needs. 
 
We had a client, let’s change his name to 'Mark', looking to get insured through Wilson Financial. He was healthy, had a strong income and he was tripling his debt by buying a new home and renting their current home. He was building his wealth and knew that he needed cover to protect it. 
 
During our fact finding process we found that a decade earlier Mark had been diagnosed with a serious condition which would prevent him from being insured. Various lifestyle changes meant that he had since stopped experiencing symptoms however, "I haven’t had any issues whatsoever since I moved to a different climate, that was over a decade ago".
 
The issue for the insurer was that he had been to a doctor just a few months prior with a symptom that could possibly be related to his previous condition. The underwriter assessing his insurance connected the dots and decided they wouldn’t insure Mark. This put the client in a difficult position "I never imagined being in this much debt, I was counting on the insurance".
 
Rather than accept the decision and inform the client, George took things a step further. He personally contacted the underwriter who had made the decision on the case and discussed the facts surrounding it. As it turns out, the incident three months ago resulted in a series of medical tests and X-rays that could potentially prove that the doctor’s visit was unrelated. George then asked the client to go back to the hospital and request these records.  With this new information, they were able to confirm that the symptom was not related to a major condition, and they reversed their decision.
 
George tells us that "Sometimes, due to major medical issues it is impossible to get insurance for our clients, however; we do everything in our power not to accept a decline on an application. I wouldn’t want to deal with the stress and anxiety of not being covered, and we don’t want our clients to go through that either."
 
We think outside of the box to get results, we work with our contacts within the industry to better our clients position, and we will not give up on what we believe should be approved.

*Names and minor details have been changed to protect identity

A tradesman came to see us last month, disgruntled with his current bank, and keen to take the dive into becoming self-employed. Let’s call him Paul.

Paul was very adept in his trade, having worked in it for over a decade. He had diligently paid down his home loan and had a good piece of equity in there. Unfamiliar with business loans or how banks worked, he had gone to his lender to ask for advice. He’d been referred to a small business banker who hadn’t called him back. A friend had told him to speak to me about financing some equipment.

Paul had a great credit character. This was illustrated by his good job stability, repayment history, equity position, and clear credit file. I asked Paul what he wanted to do. “I need to buy about $70k worth of equipment before I can go on my own. I’ve found the goods, but I don’t know how to get the finance”. Paul thought he needed a small business loan, however, he was buying equipment. Equipment is great collateral because it can be repossessed! As negative as that may sound, this is how the banks think. If they have ‘security’ or ‘collateral’ you’re going to get a better rate, and a higher chance of approval. I would add to this that the process is a lot simpler and straightforward then a small business loan that is unsecured.  I discussed the equipment loan structure with Paul, and we worked through some cash flow forecasts based on his industry knowledge.

With a start-up, we must illustrate the affordability equipment through he business’s performance. In addition, the banks sometimes like to see what we call ‘hurt money’. This means the banks want to see you as the borrower put some of your own cash on the line. So for Paul, we quickly arranged a refinance (to a much better rate of course!) and a top up so that he’d have some hurt money to throw in.

Suffice to say the lender approved the equipment loan off the back of his good character, cash flow projections, collateral and hurt money – the perfect mix for success!
​
Paul is now about to set up shop for himself, a dream he has had for many years, and one that was well within reach once he realized how to go about arranging the finances. So, if you need equipment, talk to Liz about equipment finance!

Ever seen a house that needs a little TLC before you’d consider moving in? That’s how our client ‘Sally’ felt about a cottage she saw here in the Southern Highlands.

Sally was working way too many hours to even consider renovating herself. Yet the cottage was for sale as is and she knew it had potential.

“Liz, what would it take to buy this property?” she asked me. As a long term client I knew she was serious and was able to quickly assess that she could afford the property. “It’s definitely something you can afford Sally, the numbers stack up, let’s get you a pre-approval in place so you can make an offer with confidence” I suggested.

Sally was reluctant… the property needed new floors, had a very old-fashioned kitchen, and needed a good paint. “If I use my cash to buy this property, I won’t have much left over for renovations, so I’m not sure it’s a good idea” she said, thinking out loud.

She was right. To bring the property up to standard she had calculated around $40k to $50k of works before she would feel comfortable living there. However, all was not lost! “What about obtaining a build contract for the works to be completed? We can then finance a majority of it as a construction loan after settlement, and this way you won’t need to renovate yourself?” I suggested.

Sally liked this idea, given that she could afford the repayments on an additional construction loan, and it meant she would have a qualified builder looking after the renovations. As we all know too well, renovating ourselves can take ten times as long as paying a builder!

Sally went out and obtained a few quotes, found a builder she got on well with, and engaged him to provide a formal quote, plans and specifications. We then used this to obtain a bank valuation on a construction basis, so that the bank was able to take into account the additional value the construction works would add. This then enabled us to finance a majority of the build, which meant Sally could safely make an offer knowing she could work towards a completed product.

In the end, Sally completed her renovator’s delight and was very happy with the result.
We have many clients just like Sally that are investors, home owners, or renovators that seek finance to renovate.

​
Names, locations and minor details have been changed to protect our client’s identities. 
​

​​Angela came to Wilson Financial as she and her partner were looking to separate. They had agreed she would take over the house mortgage in addition to paying him out half of its equity. She realised she would need a loan.
 
Like most people, Angela went to her existing lender to ask for advice and guidance, assuming this was the next step. Like so many that we hear of, the information provided to her was not only misleading, it was out and out wrong! "You just need to take one name off the mortgage contract." 
 
Actually, if one person is to exit a loan contract, then a completely new contract must be created. 
 
This kind of gross error in the provision of essential information - by a supposed in-house expert - only made a stressful time for Angela more difficult. 
 
Luckily Angela was then referred by her solicitor to Wilson Financial. We picked up the phone to her hopeful voice; "Apparently you're the person to talk to in this town if you want to know what you can borrow". 
 
We assessed her finances and request holistically. In order to afford the payout she would first need to consolidate some debt, which we guided her through. Then, to figure out exactly how much she could borrow, we ordered a valuation for the house. This saved the separating couple over $600 in costs in ordering a licenced valuation, as it was paid for by the bank thanks to Wilson Financial's special arrangement with our many lenders. 
 
We provided an exact figure for how much Angela could borrow thanks to the consolidation of her debt, and a clear figure for the amount she would owe by taking on the new mortgage contract.
 
As a result we could accurately quote her new outgoing commitments. After debt consolidation and a reduction in all her debts rates, the repayment was not going to increase! "That’s so good, to know I can afford this already” Angela expressed with incredible relief upon being told.
 
We went on to guide her through consolidation of her new loan and payout of her ex-partner with sensitivity and minimal fuss, during what was clearly an emotionally trying time for both of them. 
 
Angela walked away incredibly grateful, as she was finally able to move on. She now had her own home she could fall back on, a rock of security after such a difficult time. 

Here is a Facebook entry I wrote a year ago that I thought would be good to revive in blog format!  Yes it’s me on my soap box, but I wouldn’t have it any other way…Let's put rates aside and look at two other, and more important aspects of what this business offers.

Firstly… Policy. I cannot tell you how many people come to me, thinking I'm about to shop rates, fees, features and so on for them. The first thing I need to do is find the correct lender for what you are trying to achieve, based on policy issues. Well over half our clients are going to be restricted on policy and who will approve them. Yes we have all the major banks, second tier lenders and so on, but it's a maze out there people!

This is where the horror stories come from (“The bank wouldn't approve me, but they approved my friend - banks are awful!”) you just can't stick a round peg into a square hole. What suits one does not suit another, and due to privacy I can't really explain that without using general policy terms why your friend got approved and you didn’t. Some policies can be stretched at certain banks if you have strengths elsewhere, yet some flat out can't. This is why our fact finder form is five pages long. You are not the sole product of your income. Policy can pertain to employment type, length, income sources, your age, postcode of the property, property type, property zoning, your assets Vs liabilities, Debt servicing ratios, separation agreements, government income types, product type sought and the list just goes on and on.

Until I go through all five pages of our fact finder, I generally feel I have about thirty percent of the picture. So, with policy in mind, what we do is specialize in; approvals, knowledge & credit assessment first and foremost. I vet the credit policy at every lender I know, so if you get through my credit assessment I will get your approval or advocate for it if I believe in it, and I will be heard! I cannot tell you the amount of times people walk into this office every single week declined from one lender, and we have a perfectly achievable solution elsewhere. I cannot explain the time taken out of every single day to make sure every client fits the lender policy. Research, reading, vetting, talking to credit contacts, checking each banks calculations with different variants of the same information, bank development managers is a huge part of our job as brokers for finance for homes and cars. Let’s not forget, policy changes come out weekly… what applied last month, may have changed at your lender this month. You need an expert, not just a good rate.

Secondly… Speed and accountability. Do you want your lender to take a couple of days, or are you willing to accept weeks? What if things go wrong, who is your advocate, who will escalate your issue to higher powers, special contacts, or resolve blockages or miscommunications for you? Does your broker have  a premium service agreement from their banks? We do! We hold banks accountable and this can take countless phone calls, emails and online escalations from many angles. Whilst you may be disappointed things take another few days, imagine if you didn't have an advocate, I can assure you, it can take weeks longer without someone holding the bank accountable for you.

For us, we like to action everything immediately and apply countless pressures at every step of the way to ensure response times are fast. We aim to reassure and update you regularly again, a huge part of our day is keeping the lines of communication open. Whether we are updating you, solicitors, accountants, real estate agents or banks, we find this keeps everybody calm and in control.

I'll post another day on why rates may not be the best for you, when fees, policy and features could save you more. It's a complicated world out there in lending, and over the years it gets more and more interesting. Thank you for taking time to learn more about what we do – we really do love advocating for you here at Wilson Financial.
 

​I really enjoy being surprised by new scenarios, and as many of my good referrers know I actually like a challenge.

So, when a local law firm sent me a family to help obtain some finance for, and they said “We don’t really have any income”, I became curious.

Logically, people don’t survive without income, we all have expenses, so I knew the clients must have income streams. They had been knocked back by a few banks because ‘they had no income’, so they'd been told. In honesty they just hadn’t dealt with someone willing to listen to their story. A good mortgage broker will interpret the clients story, and the careful nuances of policy required, to find a path to approval. We just had to extract the information, and by that I mean, we must listen.

Meeting new clients for the team at Wilson Financial is an art form for us. We are not about the transaction, or here to talk about ourselves, we are here to get to know our clients inside out. That saying, ‘knowledge is power’ is so fitting for our industry. You can uncover real insight if you just listen and learn from your clients.

“So tell me about what you all do?” was my first question.

Firstly, one of the applicants within the family group explained that she received an aged pension. Bingo! Acceptable to some lenders, and completely tax free! Of course some lenders reject this income source, however others, even mainstream ones, find it to be a perfectly reliable income. “I also work two days a week but it’s not really much” said the same lady who received the aged pension. Despite the minimal hours, she had held the job long term, so this was quite a stable and secure income in the banks eyes.

You may be wondering, how does an aged pensioner obtain a loan? Well in this case the other applicants were younger, so we could build a joint case to lend, as long as we had an ‘exit strategy’ for how the loan was going to be paid off long term.

So we already had two incomes that both the applicant, and other lenders had already thought were not important enough to consider. Very good ones in my eyes.

Next, one of the younger applicants explained that they owned two overseas properties receiving income. Whilst they were problematic in nature at present, there were specific documents they could retrieve for us to be able to include a large portion of these incomes. So we now had four income sources.

The younger applicants had children, so received some Centrelink part A&B payments. We could include 100% of this income as the children were under the age threshold the banks required them to be to use this, and further it is untaxed income so ever dollar counted. We now had five income sources.

Suffice to say the loan ended up being a breeze to approve, we simply had to provide the correct documents to satisfy the bank. We also presented an overall strategy for how the three applicants would cover the debt long term.

So next time your client is struggling with a lender, send them somewhere for some outside of the box thinking!

​A good client of mine referred a colleague to me, lets call her "Angie". This is always the best compliment you can give a broker by the way!

Angie had rung her existing home loan lender for a top up to renovate her kitchen. They had said they would consider it but the top up would need to be a separate home loan, she didn't want this, but they said there is no choice, you have to have a separate loan facility. Already disgruntled with the rate, Angie rang another more competitive local building society. The building society said they could consider her, they ordered a bank valuation, but it came in too low. This was odd because their home was on a plot of land four times the size of everybody else’s property on the street. They had been told, “There are not enough sales of the same size blocks to justify a higher price on your valuation”.

Angie had obviously been talking to her colleague at work about all the problems and frustrations. Her colleague Jack, had also visited two lenders before he had rung Wilson Financial so knew it was worth a shot. He knew we could turn bad news around to good. So Angie rang us for a chat and spoke to Liz who happened to answer the phone that day.

When she rang, she explained her disappointment that she could not do a top up loan to her existing, and required a 'separate facility'. She did not see the point of having two separate home loans. Liz explained that she could have one simple home loan with any of our lenders, and it wouldn’t be an issue. We have no idea why a lender would require this but it was enough to turn her off dealing with them. Secondly, she explained the valuation. Liz asked a few questions and ordered a valuation online with one of our preferred lenders. We say preferred because their prices are low, their valuations can be completed online, and their policies have a wide scope. The products are good to boot. The valuation came in immediately, and was high enough to borrow what Angie needed so Liz let her know we could proceed to application.

Of course, Angie wanted to know about the rates we could offer. Whilst we had been talking Liz had emailed Abby to start negotiated pricing online and an automated response offering one of the lowest rates we can get on the market had been received minutes later. Liz let her know. She almost did not believe us. We then reviewed her income and outgoings, dependents and overall affordability situation. Liz was able to confirm we could lend her the money if we simply reduced one of the credit cards down a little. Angie was happy to do this. She asked what next so we sent her an application and checklist. After thanking me for the help, we hung up. We had spent less than 20 minutes on the phone and covered all of the territory required to qualify Angie for a home loan. No bank valuer would be required to go out and file a report which can take a week,. We also had all the fees and rates ready to send her to sign, and we knew that if the payslips matched the data she gave us we would be ok.

Suffice to say, the loan went through smoothly and Angie is now with her new lender and the renovations are now complete. We do not just shop around for clients on price, we shop on solutions. Lending can actually be easy.

​If you’re not sure what is going on with your clients finance, and aren’t getting straight answers, do you start to wonder if your client is making up stories? Surely if the banker or broker had good news they’d have given us notification of approval?

So frequently my real estate friends say “Liz I think they’re just having me on and they can’t get approved. Can you ring them to find out if they need help?”
My experience, is that when no answers are flowing… around half of the time (if not more!), nothing is going on.

Here is a typical example of what is happening behind the scenes, from a new client who came to us last month.
 
The applicants were referred by a good friend of mine in the ACT, after using their Facebook page to ask for a better broker. They had been waiting weeks to hear from their existing broker. When they finally heard he said “I haven’t done any work for you yet, I’ll have a look at it when I get back from holidays in two weeks”.
 
Perhaps some people just don’t know how to say no I can’t help?
 
Clearly the broker was in too deep and unable to find a solution.
 
The clients had not lodged an application, but had expressed an interest in a house with an agent and were keenly hanging on to the belief this broker could help them obtain a loan. Once they heard he was going on holiday they realised they weren’t important to the broker, and thought to find someone else.
Upon being assessed by our newest broker Abby, we found some debts that were holding them back, as well as an insufficient deposit. The same day that they contacted us, Abby let them know they had some obstacles. However … the difference was that Abby is trained and skilled to find a solution and offer it up. She discussed consolidating the debts and sourcing a security guarantor.
 
The clients parents spoke to Abby to find out more information, and agreed to become guarantors.  Abby had found a bank who would allow the parents equity to be used not only as deposit, but also to pay out those debts!
The difference resulted in a confirmed pre-approval with a reputable lender.   Where previously the agent was left wondering “what is wrong with this client, what aren’t they telling me?”, they now had a confirmed buyer! In so many instances, the client is not withholding information, they simply have none, as they aren’t getting efficient and transparent service from a brokerage that cares about them!

​Last month we had a client come to us declined from a major bank. Something we see every week to be honest.
This case was a bit peculiar though, as our client was self employed and despite the business being run very well and making good income, the financials showed a small loss after wages, expenses and depreciation.This had caused the loan to be declined.
 
Our client was now stuck between a rock and a hard place, as he had already bought the land, and needed to build the family a home to live in. Without a loan, they were stuck!
 
Upon our assessment we noticed the business was growing rapidly, and the client could easily afford the debts he had, the trouble was the bank couldn’t pass the file for approval as a loss by the company didn’t meet policy guidelines. The tricky part was the bank he was declined at, in my opinion, was the one we were most likely to obtain approval through.
 
We spoke to the clients accountant and requested a review of the 2015 financials, it was possible that they could be re-worked to run at a profit. The accountant reviewed his business, and took into account materials and supplies which were for jobs not yet invoiced, this is called ‘work in progress’. The correct accounting treatment is to match costs to the same period income is generated. This is called the ‘Matching’ principle - in this case it worked to our advantage as it meant we could run 2015 as a profit. The accountant got us a new set of financials and returns straight away.
 
We also supported the application with a set of interim financials to show the business continued to run at a profit for the first 7 months of the current financial year, which always brings comfort to credit teams. Particularly where you are re-starting a financial year, they would want comfort that we are not robbing Peter (2016 financial year profits) to pay Paul (2015 financial year profits) !
 
From here, we re-submitted the loan for approval with the same bank and received it within 24hours.
 
So you see, we don’t always need a new lender, sometimes we just need a new perspective.

​Recently Mark contacted us for help with his own black hole of debt. As a single fifty something year old with a home, he had made a series of mistakes and fallen heavily into debt with credit cards. On top of his mortgage, Mark had over $40k in credit cards with double digit interest. This is something we do see as mortgage brokers,  and it's important to note, that we have a no judgement policy at Wilson Financial.
 
Why? Because that's not our job! Our job is to be solutions oriented, and create a new page where our client can start to move forward again.
 
​Based on Marks income and debts, his outgoings were much higher than his income. Trying to appease all of the credit providers and going onto payment plans had only gotten him so far. He dearly wanted to roll all his debts into one by using his homes equity, and never have a credit card again.
 
By obtaining all of Marks statements for each of his debts including his home loan, we were able to credit score his repayment conduct. What normally happens in these situations is that people fall so far behind in repayments that they have overdue accounts and late payment fees. Various lenders credit score you based on how many times you were late and how many payments in arrears you are. From here, we shopped around with our 'non conforming' lenders, who are there to help clients like Mark with consolidation. Of course a few missed payments may not affect your credit report, but it will prevent you from refinancing to a major bank. By using Marks information we were able to identify the cheapest loan option on our panel for his specific situation.
 
Once we found them we obtained a valuation on his property to figure out his equity position. We then helped him to complete a loan application and got him approved.
 
Mark was thrilled with the result, as the new repayments were much less than his existing outgoings. Mark was now saving over $2,500 a month in outgoing commitments which was a big weight off his chest.

What is worse than a decline?

Being tied up in red tape is what is worse !
 
I had some new clients come in last month and I would call the loan structuring they were set up with by their bank a Big Mess! Capitals! Why? All three properties and all three loans were cross collateralized. They wanted to sell one property and move to the coast, but without a specialist to untangle this contractual mess, they were stuck.

What is it?

It is where the bank or lender will secure one loan with more than one property in order to improve it’s equity position. In effect, the bank sinks it’s claws into as much property as it can, on as many loans as it can. I use this term because in most cases it is unnecessary. Also, banks aren't inherently being 'bad guys' it is just sometimes the old school way of doing things, and completely unnecessary in this day and age in most situations.

In the graph below, the loans represented as $ are mortgaged to the houses attached by lines. In this example, two mortgages are cross collateralized against three properties. To sell one property, the bank must revalue the related mortgaged property. From here the bank will determine how much they want the mortgage reduced by the sale.

​
Can it be avoided?

Yes! With the help of your mortgage broker, you can choose to split your loans so that they are all ‘stand alone’. I.e. if you need equity out of your home to buy an investment, simply take out the deposit and costs as an equity loan, separately, that is only secured by your home. Then, take out an investment home loan against the investment property. You’ll end up with two loans but as both were used for investment both are tax deductible. When it comes time to sell your home or the investment, you will know exactly which loan needs to be paid off. If you cross collateralsed however, the bank can hold one property ransom to the other, demanding that you pay down debt other linked loans! I have seen this nearly bankrupt people in falling property value markets.

In one particular case, I saw a bank try to force their hand claiming that the loans were cross collateralized. I investigated for the client and found they were stand alone, thus releasing the clients from a near fatal financial blow. This is the difference between someone who is an expert at structuring mortgages, and someone that isn't, or simply chooses not to care for your financial well being.

The below graph illustrates a nice neat 'stand alone' mortgage structure, avoiding all the pitfalls of crossed securities. If any of these properties were to sell, the mortgagor would only need to pay off the linked loan/s. There is no confusion down the road, and no obstacles to refinancing individual home loans.​
​​

​Further benefits are that if you require lenders mortgage insurance, because your equity is low, stand alone structuring will result in a considerably smaller premium. That saves thousands when we compare scenarios for our clients, to helps to better understand good loan structuring.

All the loans can be split by purpose for your accountant too, to make tax time easier. Further you can have greater control over where your surplus funds are going and which loans are being paid off faster. Preferably the rule is the non-tax-deductible ones!

Suffice to say our new clients have now removed two investment properties from their own home, thus relieving a great deal of stress and ensuring that their 'castle' is safer.

Jane was a young mum with a toddler, a baby and a home business. Jane really needed a place of her own. She wanted to paint and put hooks in walls. She wanted to set up a home office where she could meet clients.

What she could not understand was why she couldn't get finance. The banks she had been to had told her that she couldn't qualify for a loan with them as her deposit was too small. On a small budget raising two kids, her husband working, there was not much left after rent and bills. She knew she could afford a mortgage, with rates so low, the mortgage would cost the same as rent!
​
​Fed up she asked a friend for advice and they recommended the services of our brokerage.  Jane got in touch with Matt in our office who quickly explained that Jane’s deposit was indeed, simply too small. To buy the land and build the house she wanted, she would need wait and save, OR find a guarantor.

A guarantor?
This was the first time anybody had mentioned a second option to her, so she was keen to know more. “What exactly would they need to do?” she asked.

Matt being a guarantor specialist, explained that a guarantor offers up a limited amount of the equity in his or her own home or investment. With this, Jane and her husband, Don could cover a full twenty percent deposit and costs. Then the remainder of the mortgage would be financed without a guarantor. This is the banks way of structuring guarantor finance, as it lowers the exposure for the guarantors to just small part of the mortgage. Jane had already saved enough money to cover costs, so her guarantors just needed offer around sixty thousand dollars as a guaranteed mortgage. There was no cash required from the guarantors; they simply needed to be comfortable allowing a mortgage on their property for this amount.
​
Jane spoke to her parents that night. She knew they had always been interested in helping her step into the property market, and they said yes. They wanted more details so a call was a arranged with Matt as they were in another state. Matt called them and explained everything, including the banks requirements to consider seeking independent legal and financial advice. The parents were satisfied and wanted to proceed. They had one condition; that Jane and Don took out some income protection insurance and life insurance. We got George our Financial Planner to start work on that straight away. This was the insurance for our clients, as much as it was for the guarantors. It meant that should any illness or accidents occur that prevent them from making an income, everybody would be protected.

Jane was ecstatic, she now had pre-approval to purchase land, and build the home they had dreamed of living in. Don was happy too, and seemingly grateful that Jane, Matt and the in laws were handling all the paperwork!

A guarantor is not a complex arrangement, and many major banks and lenders will offer this service where the deposit is insufficient. You simply need to ask! In our experience, around one in five buyers have a parent who is willing to offer a guarantee. Having a guarantor also saves our clients lenders mortgage insurance premiums, and means we can negotiate a lower rate as the risk is much lower for the banks on these loans.
​
Parents – you’ve got to love them!

Jim had been a carpenter for years, but got sick of it so changed careers into plumbing. He became an apprentice to his Dad, and four years later got qualified for an ABN and started to work for him proper.
 
He needed to upgrade his old ute for the job, and found a near-new model he wanted under a 'chattel' mortgage structure (a business mortgage on a moveable item of property).
 
Jim also needed permission from his wife, so he needed the rate to be sharp and repayments reasonable, to convince her. Two to tango, as they say.
 
Normally property owners that are self-employed are easy and attract the lowest rates. However, Jim had only been self-employed for four months, and had NO financials to back up an argument for stable historical financial dealings. Not a great start to getting the attention of a lender. We knew this one would need a strong sell.
 
Now, because applying for commercial finance for cars, business loans falls outside National Consumer Credit Protection Act Provisions (NCCP), this means;
 
1) You cannot use salary income from spouses or guarantors
2) On the flip side, it's a commercial decision, so the strength of your credit application is critical.
 
So, to make this one work, we took Jim's bank records and tallied the invoices. We had his accountant draw up some interim financials, which actually showed profit was higher than salary. We proved his wife could cover half the shared debts. And we even structured a tiny deposit into the deal to get it to pass. It was down to the dollars.
 
We negotiated all week with our preferred lender, discussing dollars here and there.
 
It worked! Jim was thrilled with his new ute, his wife was happy with the loan, and it set up his growing business on good footing.
 
Another success story, from Wilson Financial.

A couple of years ago I got a call from an old friend of mine Dave. Dave was working in the mines earning great money. He had saved a deposit, and wanted to buy an apartment off the plan.

He asked me if he should buy off the plan. I said no, never, any approval I give you today would not be worth the paper it’s written on in twelve months’ time. We had a good chat; I got him a pre-approval later that week so he could shop around for up to six months. Overall it was an easy loan, wages with a deposit, and stable job, it doesn’t get much easier.
 
As far as I knew, Dave didn’t find anything to buy, so we fell out of touch for a while. Trusting he would contact me when he was on the hunt again, as it happens.
 
When Dave finally called the office well over a year later, I was off sick, so the team got him on to Matt. It had been eighteen months since my initial chat Dave and he had actually purchased off the plan in Brisbane. Against my advice, he had put down a $45k deposit on the unit.
 
Since then, life had changed. Dave had left the mines and started a new business that did not have strong trading figures. To be frank, it was operating at a loss that no amount of industry know how when it comes to understanding financials could rectify.  
 
The only income we could prove was the rental income on the unit to be purchased. In terms of outgoings, Dave had rent of his own, plus personal living expenses and personal debts. Further to this, his girlfriend was not even on the lease. In summary, it looked like his outgoings were substantially higher than his income.
 
Dave knew his situation was dire, so came to us for advice. The developers were ready to settle and he didn’t know what to do. His solicitor had advised him that he stood to lose his $45,000 deposit. Dave was worried out of his mind.
 
In order to satisfy a lender, Matt had to do some quick thinking. We knew Dave had purchased with a brother John in the past as this was in some of our broker notes. The brother agreed to go on the application for finance as he had a good income. John would get a twenty percent share in the property for being on the loan. In addition, we added Dave’s girlfriend to the lease to prove he was not responsible for the entire lease on his current home.
 
The application needed to go to a lender that would consider this structure. To ask a lender to accept the brother as carrying the debt, with just a twenty percent share, is not something for a mainstream lender. However, we had someone agree to it and got the application conditionally approved.
 
Things got worse for us as Dave’s broker though. Dave’s accountant suggested the client use a bank he preferred, one of the big four. We advised not to do this, it would be a waste of time and our application would need to go on hold while he did that.  Despite our best efforts to sway Dave, he tried the major bank. Of course, the bank declined him, so Dave came back to us, hat in hand, fearful, valuable time had been wasted. He now had just five days to settle the loan!
 
We had to move fast. Matt was secured an extension on settlement through Dave’s solicitor. I received a late night call from Dave one night I was working late, he said “next week is either going to be the best week of my life or the worst. I should have never gone to the other bank, or bought off the plan, but next week I either lose $45 grand or I own a property, I’m so nervous, I can’t even tell you!”
 
I reassured Dave that we were working hard to get it done. Matt and his assistant Jess were working the phones and escalating every step of the way. Even on Friday, at Bong Bong races Matt spent most of the afternoon on his mobile to make sure the deal was approved. The deal was then settled the following Wednesday the following week.
 
Suffice to say, our stories always end on a happy note. Dave settled his unit just in time, despite all the odds being stacked against him. ​

​After four years as a trusted, valued and highly specialised employee, Jack stepped out on his own. He was now six months into an eighteen month contract, that had essentially seen his income double. You might say he was pretty pleased!
 
Soon, his work would require him up north. He wanted to sell his family's current home in Mittagong so that they could buy in QLD. And as luck would have it, they found a perfect new home there, to accommodate the changing lifestyles of he, his wife and their three kids.
 
The difference was an extra $100,000 which he needed the bank's help with. But upon visiting a mortgage broker, was told the depressing news; "Sorry mate, most Lenders won't look at self employed financials less than two years - and even in rare cases, no less than one year!".
 
Jack walked away frustrated, threatened with losing his family's dream house, of having to sell Mittagong and move twice, first to a QLD rental and then another home. What a headache!
 
He went to another broker and the news got worse. Because his contract had started in April, his Year End 2015 financial returns only reflected 6 months of ABN rego, and only 2 months of self-employment. "No Lender will give you the time of day. Come back in six months." The situation was looking dire.
 
Until he was referred to Wilson Financial.
 
We listened. We checked his salary capacity. We checked the contract. We checked his fantastic repayment history with his current Lender. Then we chatted about what else we could use to strengthen his case for securing a loan. We asked Jack to provide us two letters from large industry bodies; one his former employer, and one his current; both confirmed they had further work for him after the contract.
 
And then to top it off, we proved to his current Lender that he could still afford repayments on a bigger loan with his old salary anyway, let alone on this new doubled income!
 
Our extra efforts worked! It was enough to convince credit to approve Jack's loan!
 
Jack sold Mittagong and bought his family's QLD dream home, both settling within weeks of each other, cutting out 6-12months of inconvenience and wasted moving & rental costs. Jack and his family were absolutely thrilled; and last we heard, Jack was feeling nervous about the long drive up in the car with the kids. We hope he packed his ear plugs!
 
Another success story, from Wilson Financial.

The First Home Owner Grant (New Homes) scheme was established to assist first home buyers buy a new home, or build their home, by offering a $15,000 grant. The scheme will reduce to $10,000 on the 1st of January 2016.

What is a new home?

According to the Office of State Revenue, a new home is

• a home that has not been previously occupied, including occupation by the builder, a tenant or other occupant.
• a home that has not been previously sold as a residence. Where the home is being purchased, it must be the first sale of that home
• a home that has been substantially renovated and a home built to replace demolished premises.

Are you eligible for the grant?

To be eligible for the $15,000 grant:

• the contract date must be on or after 1 October 2012
• the home is a brand new home
• you are over 18
• you or your spouse (including de facto spouse) have never held a relevant interest in any residential property in Australia prior to 1 July 2000.
  However, you may be eligible if you or your spouse, including de facto spouse, have only had a relevant interest in any residential property in Australia on or after 1 July 2000 and you have not resided in that property for a continuous period of at least 6 months.
• the value of the property must not exceed the First Home Owner Grant Cap of $650,000 for contracts dated between 1 October 2012 to 30 June 2014
• the value of the property must not exceed the First Home Owner Grant Cap of $750,000 for contracts dated on or after 1 July 2014
• you have not received a first home owners grant in any State or Territory, unless subsequenly repaid

• you need to live in the home for a continuous period of at least 6 months
• at least one applicant is a permanent resident or Australian citizen
• each applicant must be a natural person and not a company or trust.

As your mortgage brokers, we can assist you with the First Home Owners Grant Application forms to ensure you have the grant funded at the time of purchase, or funded as a part of your build project in line with your overall budget. 

Real life case study by Liz Wilson

​Earlier this month I received an urgent email on the weekend, it was a new client, who wanted buy a house on the market. It's always good to assume there is some urgency when they are emailing on a weekend, and the property is 'on the market'. Moving fast is important in this hot market we're operating in.
 
We met up on Monday, and discussed their existing broker, who had already told this client that their lender won't allow access to further equity in the existing investment property. The broker offered no alternatives. His information is true, I explained, APRA have capped their existing lender at 80% equity lends. The broker is right, but has offered no other options.
 
I explain that there are other options based on the rough figures we have to hand. This involves a minimum deposit lend, or, looking at a lender that will refinance and release equity out of their investment home. We discuss the various rates and fees involved. My client talked to their partner that night, and contacted me on Tuesday to say they love the house so much, they still wish to go ahead with the new lender. They ask what do they say to the agent? They're nervous.
 
I call the agent and get some great advice on what the current interest in the property is, and the fact that the clients need to make an offer, fast. I ask for up to two weeks to exchange, noting that we should be ready in a week, should their offer be accepted and he agrees. This is a great benefit to using a local broker that knows their local agents, if the broker is known to the agent, they will trust you when you say your buyers finance is sound, as they've experienced that track record from you before. As a result of the discussion to the agent the client makes an offer and it is accepted with some time allocated to arrange finance before exchange, the pressure and worry is off.
 
Now, it's simply up to us to make it happen and make it happen fast!  We ordered both property valuations that day, and one bonus was, our lenders valuation was substantially higher than their previous lender. In fact, it was higher than the owners estimate, which is a sign of the times. The clients were fast to get information to us, so as a result, later on that week we had the full loan approvals from the bank for both refinance, equity release and purchase funds. Exchange could now proceed subject to their own solicitors requirements, and personal inspections.
 
This is one of the crucial differences when you have a broker working for you. Brokers are about options, not about brick walls or objections. Let us help you find a policy driven, rate driven, fee driven, solutions driven answer for you, whichever is your priority, we can show you how to navigate that maze.

A financial strategy, whether it involves buying a home, an investment property or investing through Super will not always succeed without the right ingredients. You need the right professionals. You need someone who is an expert in their field, the way you are an expert in yours. There are a sea of options to choose from, and the direction you take can make or break you.  We become our clients greatest allies, we make it happen by turning your personal goals and objectives into a reality.
… But who are we, what makes us different from the rest?
The difference is simple. We don’t work for a bank, or a corporation, or a provider. We work for you and we make things happen.
Here are four principles that we live by everyday as your trusted mortgage brokers, financial planners, support staff and advocates to the big guys in the corporate worlds…

Firstly, we understand that TIME is of the essence. In the property transaction world, time is crucial. If we aren’t efficient and completely on our game, you will miss your mark and someone else will take the property. Time is a critical factor when we present choices for you. Every client has a different time frame, or priority, and we factor that in, and will negotiate on your behalf if you need more time. We understand immediately what needs to be done, and will prioritize your needs in our team when things need to happen quickly.
Secondly ADVICE, must be catered to the individual. Everybody is at different stages of their life, career and goals. Whether you need help formulating a plan, implementing a plan, or setting long term strategies into motion, we will guide you through the process, and translate the jargon and technical terms into language you can understand. When we talk to you, we factor in your ambitions. It may be to save money, it may be to legitimately minimize taxes. It may simply be that you have a young family, or you are about to start one, and need to re-think your financial strategy. No-ones situation is ‘too difficult’. It is part of our everyday routine to solve people’s problems. Its an important philosophy here at Wilson Financial to be compassionate to our clients. Whether you’ve had a credit default you need help with, or are simply buying a new car, advice is only useful if it suits you and your own personal needs.

Third, INTEGRITY. If we make a commitment to help someone our prerogative is to do whatever it takes to get it done. That can mean pushing, escalating, negotiating, researching and being generally tenacious about getting something approved. This can be true of both dealing with credit, and dealing with underwriters. George here for instance, advocates heavily for his clients to be underwritten without policy exceptions wherever possible.  We negotiate with the banks, insurers and lenders on your behalf, and we come back to our clients with definitive outcomes. We understand that fine print is not everyone’s strong point, we make it our strong point so that nothing falls through the cracks. Recently, we noticed a lender took security over two properties when we had clearly instructed them to take it over just one. As a result, we hold them accountable to fix it and fix it quickly. An advocate with an integrity is a good friend in the finance world.
 
Lastly, CARE. We care about you. We take it personally, we want you to succeed.
 
We want you to enjoy the journey.
 
We will do anything in our power to protect your best interests.
 
We will listen to you.
 
We will help you.
 
We will make it happen. 

By George William Root
I remember as a child sitting at my Dad’s feet as he had a beer with one of his friends. They were complaining about money, the economy, their bosses, the usual conversation. Taxes are extortionate, we are underpaid and meanwhile the Insurance companies are ripping everyone off. It’s a racket! Everyone knows someone with a story about how they didn’t get paid out on their insurance. Whether it’s travel insurance that doesn’t pay for doctors’ bills when you get hurt skiing or workers compensation that didn’t pay out because of a few lines in the fine print. Insurers are just out to make money, not pay claims. 

Some years later a close family friend got into a car accident with her two children in the car. The children only suffered very minor injuries, but the mother broke her back and neck. Whilst she regained some movement in her arms and torso she was stuck in a wheel chair for the rest of her life. When we went to visit her two months later the house looked completely different, there was a ramp leading up to the front door, a stair lift to go between the floors and she had a new car that was fitted out so it could be driven without the use of her feet and legs. They also had someone working at the house with them to help take care of the children whilst her husband continued to work in his job as an airline pilot.

I remember asking my mum about what had happened, and she said that they got an insurance payout. I felt confused, because knowing that insurance is a rip-off and can’t be trusted, why did they pay for all this stuff? She had received a one million dollar permanent disability pay-out on a policy she had applied for through her employer where she worked part time as a secretary. In the late 1980’s that was a tidy sum, and with those funds they were able to minimise the damage that a terrible accident created for their family. She was able to pay off the mortgage on their family home and pay for renovations to allow her to keep living her life with her disability.

The truth is Insurance is just like the car she was driving. There are cars that are held together with cheap glue and staples, and there are cars that are built by engineering masterminds that will protect you when the worst happens. The same is true of anything. 

Some insurers advertise heavily on TV, you can call a number and twenty minutes later you have a million dollars’ worth of life cover that may potentially not be worth a dollar. When it comes to claim time, the rules are rigorous and you must fit clearly defined criteria to obtain a payout.

We don’t deal with careless insurance here, and it doesn’t take twenty minutes to get insured. It’s an in depth process where we disclose every medical detail to an insurer. It can take a month or more of interviews, assessments and advice. As your adviser I am here to be your ally through this process, to get you the right type of cover and the right level of cover. To assist you through the claims process and to review your situation to make sure that everything makes sense as your situation changes.

An ‘easy’ insurance policy is not your friend at claim time, but a real financial adviser and insurance company can save your livelihood at claim time, and take a situation that could ruin your life and rectify it. A couple of million dollars doesn’t bring back a lost loved one, or give you back the use of your legs, but it will make life a lot easier.