Sarah and Chris came to us after trying to purchase a property and receiving a decline from their bank. This was the bank they had used for years which made the decline even harder to digest and to add insult to injury they were acting on advice from their existing broker. When we had a look at their situation several issues immerged that were limiting their ability to obtain a loan. Firstly, their incomes on paper didn't service the loan they were looking for from the banks perspective, secondly, Sarah was self employed and had variable income in her business over the last 2 years and finally, Chris was a temporary resident with variable casual employment.
At face value it probably seemed logical that the bank declined their loan but on further investigation we noticed that:
- Income from Sarah's self employment was variable because the business was in its infancy. We delayed the loan application a few months and relied on improved financial performance in the current tax year.
- The improved income performance met that servicing the debt was no longer an issue.
- We found a bank that allowed for Chris' temporary residency
- Sarah's higher income meant that there was no longer dependence on Chris's income to service the debt and his short term casual income was not required.
- We obtained a preapproval so that Sarah and Chris could make offers on property with confidence.
While the journey for Sarah and Chris may have taken a little longer than your vanilla home loan application the result was the same and they are now both home owners. Scrutiny in banking at has also meant that Sarah and Chris' situation is actually becoming more and more common and we are seeing more and more being told that they are ineligible for a home loan. Our one key bit of advice is to seek a second opinion because all banks have different rules and a decline from one could mean an approval from another.