By
Hype Financial director Luke Cieslak recalls how an intense nine-month action plan helped his clients reverse years of bad advice and save $30,000
THE SCENARIO
A lot can change in six to 12 months.
You can train for a marathon, learn a new language or even write a book. But when faced with mounting financial issues, six to 12 months can feel like a lifetime.
As brokers, we see impossible situations every day, but there are still some cases that resonate more than others.
In January 2018 I received a phone call from a couple who were in a fragile state of mind and seriously considering selling their family home.
The voice on the end of the line was stressed, exhausted and frustrated: “Our friend said I need to speak to you”.
The clients were a couple in their 40s with a young family.
Despite their ambitious, high-earning careers, they were the victims of poor loan structure, too many personal debts and a barrage of broken promises from countless bankers and brokers.
It was clear to a professional that the solution they were considering would have major consequences for their long-term financial future.
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There were several immediate concerns: the male applicant was self-employed and did not have up-to-date financials; further, lodging his income tax return would trigger a bill from the ATO.
Meanwhile, the female applicant was planning to move from self-employment to PAYG; their home loan home was interest-only; and their account conduct was inconsistent across their personal loans.
A further look at their credit ratings also revealed that the male applicant – unbeknown to him – had a default judgment listed against him.
On the plus side, they both had a strong and consistent income history and I trusted that they were invested in turning things around.
Although they already knew, I made it clear from the outset that there was no quick fix.
Instead it would take at least six months of intense work to get them financially fit for a mortgage.
THE SOLUTION
The solution hinged on the female applicant securing full-time employment, which she did by mid-2018, landing a high-powered job as an executive manager at a global communications company. With this came a new level of income security, which allowed the male applicant to engage an accountant to complete his 2017 business and personal financials.
Next was the issue of tackling the default judgment, and once paid in full, account conduct became less erratic.
By September, we were able to lodge an application.
Although they were in a much stronger position, the clients still required a specialist solution, so I contacted Matt Hall from Liberty Financial, who workshopped a deal with their credit team.
At sub-70%, LVR was not a problem.
Servicing could be satisfied by using the most recent financial year’s business profits from the male applicant and the probationary PAYG income of the female applicant.
Repayments on the remaining personal debts with other financial institutions were also factored in.
Leveraging Liberty’s Custom Solution, we secured funds to refinance the home loan to principal and interest, refinance most of the personal debts and pay out the ATO debt.
The solution would save $30,000 over the next three years, net of Liberty’s upfront fees. The loan settled in October and the results were transformative.
THE TAKEAWAY
The biggest relief for the clients was that they were quite literally liberated from the trappings of their situation – a problem that had grown to become a source of untold stress and mental anguish.
They no longer had to sell their home, their ATO commitments were up to date, and they had surplus cash, making overall financial management simpler.
With good conduct, in six months’ time they would be eligible to switch to Liberty Financial’s prime product, saving even more money.
It has been proven time and again that financial health and mental health are intrinsically linked.
This case only highlighted that.
As mortgage brokers it’s important that we offer genuine care, so I am passionate about supporting clients to achieve better outcomes.
For these clients, their previous experience had seen them let down, despite a series of upfront promises in which they became heavily invested.
Education and patience helped them turn a corner, but we all knew that time would be the real key.
Although the whole process took nine months, deals like this demonstrate how, with the right expertise and support, brokers can provide enormous value and far superior service to the banks.
Luke Cieslak
Director
Hype Financial
