Michelle Lewis, mortgage broker at Easy Loans, explains how a diligent savings plan helped one of her first home buyer clients to keep their property ambitions on track when all other avenues were exhausted
Buying your first home is an exciting time, but it’s also a time of stress and worry, which is why so many first home buyers use the services of a broker.
The client for this particular deal was referred to me about 18 months ago by her friend, who was a previous client of mine.
The client’s goal was to purchase her first home over the next 12-month period. We emailed and met a number of times over the following months to discuss her borrowing potential, savings requirements, ongoing costs, deposit amounts and other considerations. At each meeting we reviewed how she was tracking to reach her goal of homeownership, and after around 10 months we were finally ready to submit the paperwork to the bank for pre-approval.
Just as we were getting ready to submit, we looked at using the client’s parents’ property as supporting security. Her parents had already provided a guarantee to their son, which was still in place, but based on the figures available there was still enough equity for a second guarantee.
On this basis, the application was pre-approved and the client could finally start shopping for her dream home, which she purchased at auction shortly afterwards.
At this stage the bank started the process to obtain consent for a second mortgage on her parents’ property. However, they determined that the structure was too complicated, and as a result a second mortgage would not be possible.
With the first bank unable to provide the solutions we needed, we made the decision to switch to her parents’ bank, BankSA, and continue the process. Due to the auction conditions in the contract there were time pressures and limited options for extensions.
Because of the additional information we had provided through the consent process with the first bank, I made fairly quick contact with the BDM at BankSA so they could review the parents’ circumstances and make sure we were on the right track.
All was progressing well until the second round of valuations. Because of the downturn in the Darwin market over the last five years, the parents’ property was short on equity to support the client’s new home loan as well as Loansher father’s loans and her brother’s ongoing guarantee.
We revalued her brother’s property to see if we could release her parents from the guarantee and also spoke to her father’s broker to review our options from their perspective.
While the customer’s preferred option was to proceed with a guarantee and avoid having to dip into her budget for mortgage insurance, unfortunately, after looking at the scenario from multiple angles, we made the decision that we couldn’t proceed with this option.
Thankfully, due to the hard work we had put into preparations over the previous 10 months, the client had saved enough of a deposit that we could proceed with a mortgage-insured lend. We submitted the request to the bank and received formal approval.
It was such a great feeling to tell the customer that she was approved after she had been through such a roller coaster of emotions over the course of the last year. The smile in her voice when I called to congratulate her on both the approval and settlement was priceless.
After all, it is customers achieving their dreams that makes this career so rewarding.
I have spoken with the client recently, and she is so happy with the house and achieving her goal of homeownership. Due to the service provided, she has also referred other customers to me.
In addition to the reward of helping a client, I have also drawn some professional lessons from this experience.
I learnt very quickly that, as markets change and bank policy is amended, what we do today may not be that easy tomorrow. It takes perseverance to work through a client’s choices; you have to find the most suitable loan option to fit their needs and then if that plan A fails you have to dedicate yourself to working through plans B, C and often D.
The client also needs to be dedicated. Yes, communication was important in this deal and is key to all applications. However, the client trusted my advice and worked with me quickly throughout the process and, in the end, that made all the difference.
Mortgage broker at Easy Loansher