By
Arthurmac & Co senior mortgage consultant Michael Hughson used his many years of experience in specialist lending to assist a client who had gone through a separation and needed to consolidate debts, one of which was incurred by her ex-husband.
The scenario
This was an existing client of Arthurmac who we had assisted previously via our private mortgage fund. We had originally assisted the client with a second mortgage of $100,000 to clear an earlier business debt. This was then reduced to $40,000 via a debt reduction with the assistance of the client’s parents. The first mortgage of $320,000 remained.
The client had just gone through a messy separation from her husband that had caused her some stress, and she came back to us as she needed to get her finances back in order and to consolidate her debts into one loan.
Our client was looking to consolidate her existing first mortgage, the second mortgage, another personal loan and another caveat that was the result of her ex-husband not paying a debt. (Our client was actually unaware of this debt being there until a title search was done, and then had to arrange additional borrowings to clear this facility as part of the settlement.)
Having worked on the specialist lending side of things for almost 20 years, we were able to gather all of the required information and present to the lender the benefits of the new loan to the client.
Given that the client was not required to be registered for GST when the original application was undertaken, the income declared from her self-employed businesses was not meeting her requirements in relation to servicing the required loan amount over a traditional loan term of 30 years. However, because the client was only 30 years old, Pepper Money was able to consider her for a loan term of over 40 years. This enabled the repayments to be lower and allowed the client to borrow sufficiently to consolidate all of her debts into one.
Our client is self-employed as a hairdresser and also runs an online business distributing goods from her hairdressing services. The loan was formally approved and ready for settlement when the caveat was discovered, which meant the settlement required removal of the caveat.
The client was in discussion with her solicitors, and the caveat then went from $30,000 owing to $90,000 (including fees and penalty interest) required to pay it out, which meant we had a shortfall and were not able to settle. She then had to go, via her solicitors, to arrange and negotiate this back down to the original amount of $30,000.
It was during this period of negotiations that COVID-19 hit and the client’s hairdressing business slowed down. However, being in a regional area, she was still able to work under certain criteria, and her online distribution business increased and showed strong growth. Given the time needed for the resolution of the caveat, the original application and valuation expired.
Once the caveat payout negotiation was resolved, our client was then able to provide updated business statements showing the ongoing and continuance of income, along with a full new application being submitted.
Working with Pepper Money and the client, we were able to get the loan settled, and the client was back to one, more manageable repayment. She was very grateful and appreciated all of the assistance.
At Arthurmac, we understand that each deal and client is different, and it is about obtaining all of the information from the client and sourcing the most appropriate solution and lender to meet each client’s individual situation.
We are a very solution-driven business, ensuring there is a benefit to the borrower from each loan we do, whether it be a home loan, car loan or private mortgage facility.
As silly as it sounds, during an initial discussion/consultation we always request the client to be upfront and tell us everything, as this will enable the best outcome for the client. With ongoing and open communication with this client during the process, a successful outcome was achieved.
This honesty and openness allows us to provide everything upfront to the lender and makes for a smoother assessment of the application with no, or not as many, hidden surprises.
This loan also showed the power of perseverance, as the whole process took about nine months from the commencement of the application to settlement. Given the timing of this application, our follow-up process was very important, as well as obtaining regular updates from the client so we could provide this information back to the lender and solicitors.
