Andrew Algie, director of property and finance firm Addisons Advisory Group, had to act fast and do a detailed investigation to help two brothers who had signed a contract to rebuild a duplex but whose loan approval had fallen over.
Clients: Two brothers and their wives
Goal: To secure a loan for a duplex knock-down and rebuild
Loan size and term: $1,458,000over 30 years
Location: Sutherland Shire, Sydney
Clients become aware of Addisons’ business and services in many ways. In this instance, the clients found out about us through word of mouth, from one of our existing long-term clients.
Two twin brothers who were living in the same property wanted to do a knock-down and rebuild of a duplex. They had been trying to get finance for over nine months and only had another three months to obtain finance approval or potentially lose their $25,000 deposit and face litigation from their builder. There was a non-completion clause in their contract that would have cost them over $100,000.
They were discussing the frustration of sourcing a loan with a friend who had experienced a similar situation – before turning to Addisons for assistance. The brothers have now started the construction of their duplex and are glad that they contacted Addisons to assist them.
They had previously received conditional approvals from two major lenders, both of which fell over at the last hurdle on final review of the loan. They had two big issues that we needed to work through:
- Servicing – both brothers had their own investment properties and associated loans that they had held for many years.
- Equity – they already owed about $500,000 on the proposed property and had a build contract of just under $1m, which would have taken their LVR to nearly 100% based on the duplexes being valued on one title – which is how banks usually value these properties (rather than as separate titles as these clients had intended).
The clients were living together in one house, so along with the financial pressure and potential penalties they were facing, there was the added pressure of their living situation. The dream homes they were hoping to build were quickly turning into a nightmare.
This was a complex scenario. We needed to identify how we could improve the clients’ servicing and access to equity and do so in the short time frame available before penalties would be imposed.
We educate our clients about the options that may suit their unique set of circumstances – the potential benefits and the risks
During the fact-finding process, our focus at Addisons is to really get to know the client and their situation in order to best meet their needs and financial situation.We discovered that their 78-year-old mother was living with them and that she also owned a property. Then we investigated their investment loans and the remaining loan terms and came up with the following solutions:
Servicing – refinancing their existing investment loans and amortising these over 30 years would reduce their monthly commitments on these loans and make serviceability possible.
Equity – because the clients’ mother lived with them and planned to continue to do so, we were able to identify the substantial benefit of using her house as additional security, and she agreed to be a guarantor for the additional loan.
We educate our clients about the options that may suit their unique set of circumstances – the potential benefits and the risks. By providing these clients with detailed information, they were able to make an informed decision and fulfil their financial potential. After a family discussion, the solutions we proposed were agreed upon, and they were thankful that we took the time to provide these options that they did not know were possible. This is the point of difference Addisons offers: we have the expertise required to understand more complex transactions.
Our philosophy is to work closely with our clients to devise personalised finance solutions. We don’t take a deal on face value and instead gain an in-depth understanding of our clients and their financial situation in order to capitalise on the advantages they may have.
We also pride ourselves on having a strong understanding of lenders’ requirements, and it is through this solid base of knowledge that we can effectively tailor finance to our clients and their unique situations.
These clients had been through a stressful experience with lenders and came to us feeling a bit jaded by the process. It was also clear that the other major lenders hadn’t taken the time to identify potential solutions and had made assumptions about the clients and their situation.
After dealing with the Addisons team, the clients were able to avoid financial hardship and have since shared their story with friends, who have also contacted us to assist them with finance. For us, this is the best compliment we can receive.
Addisons Advisory Group