The complex deals brokers could be overlooking

Australian mortgage brokers may be declining deals that have a viable path to approval simply because of how a particular lender models its numbers. Wave Money founder and managing director John Flavell says servicing methodology, not a borrower's actual financial position, is often what determines whether a deal gets across the line. Wave Money uses a net servicing ratio, assesses external debts on actual repayments rather than a stressed rate, and publishes its living expense benchmarks inside its servicing calculator so brokers can pressure-test a scenario before lodging an application. Flavell outlines how this approach applies to self-employed borrowers without current financials, complex trust and company structures, joint debts, credit cards paid in full each month, and borrowers whose income profile has changed following separation or divorce. For brokers with clients whose circumstances do not fit a mainstream lender's model, he argues the conversation with Wave Money is worth having before the deal is ruled out.

Why do some mortgage deals fail at one lender but work at another?

The way a lender calculates servicing determines whether a deal succeeds or fails, not the borrower's underlying capacity. Wave Money uses a net servicing ratio rather than a debt-to-income cap and assesses debts held at other lenders using actual repayments, with a 2% buffer applied only to the Wave Money facility itself. Publishing living expense benchmarks within its servicing calculator also gives brokers full visibility over the figures before submitting, removing guesswork from the scenario assessment.

How does Wave Money treat credit cards in its servicing assessment?

Where a borrower can demonstrate their credit card has been paid in full each month for the previous three months, Wave Money can exclude the card limit from the servicing calculation entirely. Founder John Flavell says the impact is significant: a $100,000 card limit could otherwise reduce a borrower's calculated capacity by around $450,000–$500,000 under a standard assessment that assumes the facility is fully drawn.

Can self-employed borrowers without current financials get a loan through Wave Money?

Yes. For self-employed borrowers whose tax returns or financial statements are not yet completed, Wave Money accepts several alternative income verification methods, including BAS statements, business banking statements and an Accountant's Declaration. Under the declaration approach, the accountant confirms the borrower can meet the proposed commitment without undue hardship, without being asked to certify a specific income figure. Flavell describes this as 'everyday bread and butter' for Wave Money.

How does Wave Money handle complex structures like trusts, companies and joint debts?

Wave Money applies human credit assessment rather than automatically attributing all associated liabilities to the borrower. Where a separate company or trust is meeting its own obligations, an accountant can verify this, allowing Wave Money to isolate those commitments from the borrower's position. Similarly, where a borrower is meeting an agreed share of a joint debt, Wave Money can consider only that share rather than the full liability.

What lending options exist for self-employed borrowers looking to buy their business premises?

Brokers with self-employed clients should look within their existing book for commercial property opportunities. A business owner who has rented their premises for years may be able to buy instead, and Flavell says Wave Money takes a similarly straightforward approach to suitable small commercial property as it does to residential lending. A borrower carrying ATO or business debt with substantial equity may also be able to restructure that debt into a longer-term facility to reduce cash-flow pressure.

How does Wave Money assess income for borrowers going through separation or divorce?

Wave Money regularly works with borrowers who want to retain the family home but now need to service the debt on a changed income profile. Returning to full-time work, child support, shared care arrangements and boarder income can all form part of the servicing assessment. In one scenario Flavell discussed, recognising income from a spare bedroom helped a recently separated borrower demonstrate sufficient servicing to keep her home.

How should brokers approach a deal that doesn't fit another lender's servicing model?

Flavell's advice is straightforward: pick up the phone before ruling the deal out. Wave Money's broker relationship managers work directly with its credit team, managing the scenario from initial conversation through to settlement. Brokers regularly tell Wave Money that if a deal does not service with them, it probably will not service anywhere, which underlines the value of having that conversation early.

Roundtable participants

John Flavell — founder and managing director, Wave Money. Leads an Australian independently owned non-bank lender focused on borrowers whose needs may not be met by traditional lenders; founded the business with a team of seasoned mortgage and finance experts; champions a common-sense, human credit assessment approach to nuanced borrower scenarios.