"The bank has said NO, but that's not the end of the story"

SPECIALIST HOME LOANS

HOME LOAN REFINANCING UNDER DIFFICULT FINANCIAL CIRCUMSTANCES

If you find yourself in Financial Difficulty, a Bank is not going to be the answer. The Banks hands are tied by regulated Credit Policy, which is inflexible. Even though you may have been a customer for a long time, if your circumstances are outside of their credit policy, it’s a NO. They can't help you. These are the rules for what is called a Deposit taking Institution. That’s anybody that holds people's money in a bank account. They are not allowed to take risks.

That’s where Specialist Lenders come in. They still have policy guidelines, but it seems to be a more common-sense approach. The numbers will still need to add up. They will look at seeing if the proposed Consolidation Loan will fix the Financial problem, put you in a position where the payments are now sustainable and they will still leave some equity protection in the Loan.

You will not be able to borrow up to 100% of your Homes value. With any sort of Debt Consolidation, the maximum amount of the value of your home you can borrow, will be around 80-85%.

You will incur Risk fees or a Mortgage insurance cost and the Interest rate will be determined by the risk factors involved. But considering the amount of money it costs to sell a house, move and then get back into the market later, it is often worth it. Especially if house prices are rising at the same time. However, you are of course, not stuck here, once you are back on a better financial footing, we can refinance you back to a better rate. We suggest a quick yearly review for all Home Loans to see what is available and if it can save you money. As the family home is most peoples major cost, it can make a major favourable difference in the long run.

Download our "Has The bank Said NO" brochure

SELF EMPLOYED HOME LOANS

SELF EMPLOYED LOW DOC HOME LOANS

If you have done your Tax Returns and Financials and are showing good income for the last 2 years, the process and Interest rate will be the same as a normal Home Loan.

But Self-employed borrowers often come up against the challenge of not being able to present a raft of payslips and tax returns to back up their loan applications. This need not stop you buying your dream home.

Many lenders offer low-doc or Alt-Doc loans for self-employed borrowers who can’t hand over Tax returns, Financials or haven’t been in Business for 2 Tax return periods. This means that, rather than the usual documentation, you prove your ability to service a loan using bank statements, GST BAS reports, and a declaration from your accountant.

Of course, as with any mortgage application, you must still prove that your income outstrips your spending and you can service the loan. Getting this right is more than presenting a lender with a few quick sums on the back of a napkin; it takes preparation.

Here are some quick tips to help get you that loan:

  • When applying for a new Home Loan reduce debt: pay down credit cards and personal loans, and be sure to lower the credit limits as they are paid down, as lenders assess the total credit available to you as a potential debt level, not just the amount you owe. If it’s a refinance we can look at consolidating these Debts into the home loan to increase serviceability of the payment.
  • Speak to Money Buckets about how the structure of your business and your taxable income will impact your ability to borrow.
  • Do your taxes when you should, and always pay your tax assessments on time.
  • Save. Saving a deposit is obviously important, and showing your ability to live within your means and save is as well. This is key to serviceability – you want to show at least a six-month history of high income and low expenses.
  • Come to Money Buckets rather than a bank. Money Buckets has access to specialist lenders that assess applications on a case-by-case basis and tailor their products to self-employed borrowers and contractors, while bank lenders generally do not.

Low-doc loans do differ from standard loans in a few ways, apart from the application process. Lenders offset the extra risk they are taking by lending to a self-employed borrower or contractor by charging slightly higher interest rates and placing some extra rules on loan-to-value ratios (LVR) and insurance requirements.

Generally, you can expect an interest rate for a low-doc loan to be one to two percentage points higher than for a full-documentation loan.

Most lenders will also insist on an LVR of no more than 80 per cent – meaning that they will not lend more than 80 per cent of the property value, as assessed by the lender.

In cases where the loan amount is for more than 60 per cent of the property’s value, some lenders also require self-employed borrowers to pay for lenders’ mortgage insurance.

But the Lenders are all super competitive at the moment, so these restrictions may change.

REVERSE MORTGAGES

REVERSE MORTGAGES AND AGED CARE

If you would like the financial ability to spend your retirement how you choose, with independence and dignity, you should talk to Money Buckets. Most people would like to stay in their family home as long as possible. A Reverse Mortgage will allow you to Draw against the equity in your home without having to sell it – releasing funds for a well-earned and comfortable retirement. There is no repayments needed until the Home is sold. So your super and pension can be used for living costs and Lifestyle.

You can take funds as a lump sum, as a top up to your pension to give you a higher regular income or a combination of both.

The total loan amount, including accumulated interest, is usually repayable when you move permanently from your home. This could occur when you sell your property, move into long term care or pass away. With Couples it is when the last person leaves.

You will be expected to keep the Home maintained, rates and Insurance up to date. You continue to own and live in your own home for as long as you wish, benefiting from any potential increase in property values. There is very strict Government regulation to protect you. Making regular repayments is not necessary, although you are free to do so at any time. The amount you can borrow is typically based on your age, property location and the value of your home. A Reverse Mortgage is designed to help you manage your financial requirements by accessing only what you need, as and when you need it.

What can I do with the money?

A Reverse Mortgage is yours for you to do whatever you choose. Many people use the loan to fund home repairs or improvements, repay debt, travel to visit family members, pay for medical procedures, upgrade to a more reliable car, assist with in-home care, or a host of other uses to make life easier and more comfortable. Fundamentally, a Reverse Mortgage is designed to help you live a better retirement. You should contact Centrelink to discuss any impact borrowing may have on your pension or other government entitlements.

An Aged Care Loan works similarly. This can provide the large deposit needed for a Nursing Home, where the family home is not wanting to be sold at that time. There is generally more of the Equity in a home available in this case.

Who can apply?

Anyone aged 60 or over who owns their own home can apply for a Reverse Mortgage.

Secondary Properties

A Reverse Mortgage is also available to be taken over an Investment Property or Holiday Home.

Aged Care Option

The Aged Care Option is available for those residing in or moving into permanent long-term care. It has a maximum term of 5 years. Any customers who currently reside in and intend to stay in their home should not consider or select this option.

Download our Reverse Mortgages brochure

View our Reverse Mortgage Information Statement

ARTICLES

Contact Us

Customer Enquiries: 1800 825 010

Admin Office: 0243696287

Email: info@moneybuckets.com.au

Post: PO Box 6100, Kincumber, NSW, 2251

Credentials

Money Buckets ™ is a Trademark of Starlight Home Loans T/as Fast Debt Help

ABN: 94 145 613 056

Credit Lic 388809

Established 2010

MFAA membership 319292

Affiliates: Second Step Administration RDAA 1668

The Rite Place Pty Ltd trading as Debtrite