In the scenario examined, the broker was easily able to explain why the borrower had adverse credit listings. In addition, by demonstrating that the borrower was already maintaining the required loan repayment across the current debts the broker was able to show that the borrower should not default in the future.
Alastair wanted to refinance his mortgage, consolidate his credit card debts and obtain $80,000 in cash out in order to undertake home improvements. The total LVR for his application was 80%.
Self-employed for three years, Alastair’s income has increased considerably from first two years of the business and he has not yet done the latest year’s financials. Therefore a lo doc solution was going to be the most appropriate for his situation. His business is GST registered, and he is able to provide business activity statements (BAS) to verify income.
To further complicate matters, Alastair had a default for council rates of $1,800 due to a marriage breakdown. This was listed in August 2011 and was paid April 2012.
The combination of being lo doc, requiring cash out and having a default meant it prohibited most lenders from being able to provide a solution to Alastair’s needs.
In this particular instance Alastair had a need for a product covering both these niches. The Homeloans Accelerate RED low doc 80% LVR product was the answer to Alastair’s needs.
This product does not use credit scoring for assessment, nor are applications required to satisfy criteria of mortgage insurers as LMI is not required.
The Homeloans Accelerate RED low doc is generous on the tolerance of credit impairment, with unlimited adverse credit (paid or unpaid) when registered more than two years ago, and minor defaults of under $1000 ignored. Discharged bankrupts are also considered.
It is also accommodative with regards to loan purpose, being available for refinance, debt consolidation (no limit to the number of debts), unlimited cash out to 80% for acceptable business purposes including ATO debts, working capital and purchase of business equipment.
It also offers a range of verification options.
The biggest takeaway from this scenario, is never assume that a deal can’t be done. Despite being a borrower with credit impairment, requiring a lo doc loan for cash out purposes, the deal could still be done.
Homeloans’ broad product range covers such a wide variety of scenarios. We offer loans not requiring genuine savings to 95% LVR and up to 85% without LMI or Lender Protection Fee, and that are assessed without credit scoring.