Refinancing to access cash to reduce or consolidate other debts is a common enough occurrence, but sometimes your loan type and living situation don’t align to enable a bank’s computer to say yes to the process.
Venro recently helped a customer seeking to refinance a property he owns in order to access cash to clear his wife’s student loan. Most refinancing applications within an 80% LVR are fairly straight forward but this application had a number of challenges.
Our client is the sole owner of the property, both on the title and on the current loan, however, now lives with his wife and banks therefore reassess his situation.
The issues we faced when seeking to refinance:
- Being married now, means the bank expected our client to include living expenses for a married couple, not the single expenses of the original loan.
- Our client’s wife is not an owner of the property, or party to the loan and they wanted it to remain that way.
- Lenders have limitations on the amount of cash out permissible for personal purposes.
- The ability to service the loan was not evident with most lenders needing to factor in joint married couple living expenses.
- Our client had recently started a new job on a fixed-term contract. We needed to prove contract renewal as his role was within the same organisation but under new contractual arrangements.
How Venro tackled the challenge
Venro workshopped with multiple lenders and found a lender that was able to accept the income despite being on a fixed term contract and followed through troubleshooting with the following parameters and strategies:
- With the loan and property being in one name this meant only using one income, in which case our client wouldn’t be approved for the loan amount required.
- Other lenders suggested adding his wife on the loan to show servicing, but the client wanted to keep the loan in his name since the property is also owned in his name, so this wasn’t an option.
- We tapped into the lenders “common debt reducer” policy and our client’s wife signed a declaration form and provided her payslips to verify she was earning an income to support herself, allowing us to show living expenses for our client as a single applicant.
- This allowed us to demonstrate servicing on the amount of debt required. Most other lenders required joint couple living expenses to be included regardless.
The Results
After tackling the bank’s parameters and ensuring we had all the right supporting documentation to enable our client to continue to own the property and the loan singularly in his name, we received agreement from the bank for the cash out.
Delighted with having achieved what we set out to do we happily enabled our client to obtain the cash out amount required to clear the student debt and to top it off the new loan is on a lower interest rate than previously!
Win win, and worth the extra research and planning!
I had a fantastic experience with Venro Finance in refinancing my home loan.
My situation was atypical in looking to consolidate some of my wife’s overseas student debt into my mortgage. Venro worked very hard to make that a reality which has given us much more financial flexibility moving forward.
I could not speak highly enough of the team at Venro
Rupert Kenny