FAST Matters
Origination News - Monthly news for Loan Brokers 29 June 2016

Scenario 1 – Repayment of previous business debts including ATO

Previously self-employed applicants who took up PAYG positions 6 months prior to applying, were looking to refinance their existing mortgage of $660,000 secured against their owner-occupied residential property (valued at $1,000,000) in order to finalise outstanding obligations relating to a recently failed business venture.

The outstanding obligations included a taxation debt of $80,000 and various business creditors totalling $50,000. The applicants also had 2 unpaid utility service defaults listed on their credit file, also relating to their failed business.

The solution provided by La Trobe Financial

We were able to refinance the applicants existing mortgage and release $140,000 in equity to allow the applicants to finalise their outstanding business obligations, preventing further action being taken against them from creditors that could potentially damage their future credit rating, as well as saving them considerable interest charges being levied by the ATO.

As the outstanding debts to the ATO and the various creditors were not yet listed on the applicants credit file, we were able to approve this loan at 80% LVR under our prime residential loan product.

Scenario 2 – Commercial “LeaseDoc” refinance with cash out for investment

Applicants own a commercial premises (valued at $1,300,000) that is leased to a retail outlet for $80,000 p.a. with 3 years remaining. They have a current debt outstanding to a major bank of $650,000 secured by this property.

Applicants are looking to access equity ($260,000 total) in order to purchase additional stock for their own business ($170,000) and to consolidate an outstanding ATO debt of ($90,000).

The solution provided by La Trobe Financial

The monthly rental income received covered the proposed monthly loan repayment commitment by 1.22x (ICR), and therefore we were able to approve a loan of $910,000 (70% LVR), allowing for the refinance and equity release under our Commercial LeaseDoc product by simply verifying serviceability from the Lease Agreement already in place.

The take away for brokers to use with your clients

Clients with outstanding ATO and business debts don't have to seek "credit repair" loan products.

By dealing with a specialist lender like La Trobe Financial your clients can still access prime products for both Residential and Commercial scenarios, providing we can resolve the issue early enough before they reach their credit report.

We expect to see many more scenarios like the ones above over the coming months as people finalise their tax returns following the end of another financial year, and this is where brokers can benefit. We suggest brokers commence making enquiries with their clients (particularly the self-employed) about whether they have any outstanding tax obligations that need to be addressed.

Not only does this allow them to rectify the issue earlier, possibly saving them interest charges, but it allows the broker to demonstrate that they are looking out for their clients on an ongoing basis, and in this case, before they even ask.

This level of proactive service can lock away clients for life.

Best regards,

Cory Bannister
Vice President,
Chief Lending Officer

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La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

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

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