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Client: Dan and Rachel, New Client of Mortgage Corp in 2017
Marital status: Married with 2 children
Income: $200,000+ per year company profit
Occupation: Self employed trade services
Location of new investment property: South Australia
Suburbs of existing properties: Coburg, Point Cook and Chelsea, Victoria
Objective: Obtain a loan for a third investment property with solid rental returns to build their wealth
Results: Purchased their third investment property using extra borrowings of $420,000
We asked Dan and Rachel to have their accountant send us their latest company financial statements so we had a better idea of what they were earning.
What we noticed was that:
After doing the necessary addbacks to increase their business profits, our knowledge of different lenders’ policies meant we were able to recommend another more favourable lender with a good self employed loan to these investors.
Their previous lender had taken the lowest of their business profits over the last two years as their income for lending purposes. Meanwhile, we knew of a lender that would take into account the average of their profits over the last two years.
Using these techniques and a more appropriate loan structure, we were able to help the couple get pre-approval for another investment loan of up to $420,000.
The final thing we did was help these two investors structure their debt better. Dan and Rachel had a considerable amount of extra cash of $150,000. Instead of putting the $150,000 into the new purchase, we advised them to use it to lower their owner occupier loan. This allowed them to have more tax deductible interest for negative gearing.
It was a good thing that Dan and Rachel came to see us so they didn’t have to miss out on a great investment opportunity – which they would have, if they had listened to their bank manager!
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