19 April 2012

Our refreshed criteria are helping brokers already!

It's only been two weeks since we refreshed our criteria - removing default caps, and accepting mortgage arrears, but it has already proved very popular.

Early feedback from brokers is that our flexibility, when assessing applications for borrowers with an impaired credit history, provides us with an important point of difference. By removing default caps, and instead looking at the events or reasons that led to the defaults being incurred (such as redundancy, marital breakdown, serious illness etc.), and giving consideration to their current and future financial situation, we can now assist those borrowers under our standard loan products.

Some recent cases where we were now able to approve a loan for borrowers with impaired credit are as follows:

Case Study 1 - Multiple defaults

Borrower A was a self-employed builder with the following defaults listed on his credit file:

  • $22,367 unpaid default to supplier
  • $13,969 unpaid default to supplier
  • $4,211 paid default to finance company
  • $355 paid default to telephone provider

4 defaults totalling $40,902.

During the GFC the borrower’s cash flow dried up as he was awaiting payment of invoices from third parties; these payments were never received.

As a result, the borrower was unable to pay his suppliers and defaults were incurred against his personal credit file.

Borrower A sought sub-contract work with a large building company and has been contracting to it for the past eight months, restoring a positive cash flow to the business.

Borrower A was seeking a loan at 80% LVR to consolidate debts and repay outstanding creditors to rectify and clear his default situation.

Result: APPROVED under our Express Credit Repair loan product at 80% LVR.

Express Lite doc Credit Repair ≤ $1m
LVR 80%: ≤ $1m
Purpose Purchase, Refinance, Debt consolidation and Cash out (10%)
Credit Impairment Multiple defaults – individually assessed^
Mortgage Arrears None
Rate From 9.00% (includes trail commission)
Term 30 years
Application fee 1.75% - no risk fees
Serviceability Lite doc (No LMI or BAS statements required)
Broker commission - ongoing trail
- upfront commission with no claw back

Case Study 2 - Mortgage arrears

Borrower B worked with a major financial institution and was made redundant, Borrower C (spouse) worked PAYG in the sales industry, heavily reliant on commission payments received.

Following Borrower B's redundancy, the couple struggled to meet their mortgage repayments as well as their other personal liabilities that consisted of three credit cards and a personal loan.

Borrower B found permanent PAYG work with another financial institution three months prior to application and is no longer on a probationary period.

The couple were able to resolve arrears on credit cards and personal debt, but mortgage remained two months in arrears at the time of application.

Borrowers seeking an 80% LVR loan to consolidate all debts.

Result: Loan approved under our standard Full doc Residential loan product at 80% LVR.

Full doc Residential ≤ $1.5m
LVR 80%: ≤ $1m
75%: ≤ $1.5m
Purpose Purchase, Refinance, Debt consolidation and Cash out
Credit Impairment Multiple defaults – individually assessed
Mortgage Arrears Up to 2 months^
Rate From 7.84% (includes trail commission)
Term 30 years
Application fee From 0.50% - no risk fees
Serviceability Full doc (last 2 pay slips and employment reference or 2 yr financials)
Broker commission - ongoing trail
- upfront commission with no claw back

These are just two examples of how we have helped brokers place their loans in the past fortnight. If you have any similar scenarios on your desk that you are having difficulty placing, contact your dedicated BDM, or call our experienced credit team direct now on 1800 707 707 to see if we can help.

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Best regards

Iain Pepper

Your "lender of first choice"


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Iain Pepper
Head of Lending

t  +61 3 5177 1767
e  ipepper@latrobefinancial.com.au

Craig Robertson
National Relationship Manager
0447 599 664
Daryl Hill
National Relationship Manager
0408 566 524
0409 435 559
0421 029 691
0421 029 687
0408 566 518
Steve Lawrence
Head of Commercial Lending
03 8610 2807
Cory Bannister
Head of
0403 361 026
Darlene Musgrove
03 5177 1670
Andrew Mercer
03 5177 1652
Mercy Bvirakare
03 5177 1607
Jimmy Mc Grath
03 5177 1660
Luke Jones
03 8610 2816
Mark Stratton
03 8610 2832
Melissa Greenwood
03 5177 1798
David Ladd
03 5177 1770
Katie Paulet
03 5177 1718
Linda Gorski
Asset Retention
03 8610 2817
Phil Wilson
Asset Retention
03 5177 1656

La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 145 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

Copyright 2010 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

^All loan applications are fully assessed to ensure the loan is not unsuitable and that we meet our responsible lending obligations. All defaults are considered in our responsible lending assessment. All features and interest rates are current as at the date of publication. This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website. La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you. The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Investors risk losing some or all of their principal investment.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213