Promoted by Mortgage Corp
Case Study: Mortgage Corp helped two self-employed investors successfully secure their 3rd investment property (after their bank refused to lend them any more money).
Client at a glance
Mortgage Corp helped a self employed property investor couple add a third investment property to their property portfolio (total of four houses, including their own home) after their bank refused to lend them any more money.
Loan strategist Neil Carstairs found opportunities to increase their borrowing power by looking closely at their financial statements.
Neil found them a suitable lender and restructuring their loans to allow them to borrow up to $420,000 (after their bank wouldn’t lend them anything!)
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
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
Dan and Rachel were self-employed investors whose business was going well with a large amount of deposit saved up and good income. They already owned their own home in Coburg, as well as two investment properties in Point Cook and Chelsea. They were keen to continue to invest and buy a third investment property.
However when they went to see their bank, the lending manager told them they had maxed out their borrowing capacity and couldn’t borrow anymore. They read our 5 star customer reviews and decided to ring us to see if we had any other ideas.
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!
Note: for privacy reasons, names and locations used in this case study are not real client names or locations.