Empowering Clients to Achieve Their Financial Goals

In Australia, getting a mortgage can be challenging, especially for self-employed individuals or casual workers. Let's take a look at the case of a couple — one self-employed and the other a casual worker. Their story might resonate with your own situation.

Profile

This couple consists of one self-employed individual whose business has only been established for 13 months, and the other is a casual worker who recently started a new job just two months ago. They were looking to refinance two investment loans at an 80% loan-to-value ratio (LVR), with a split loan structure combining fixed and variable rates, along with a 100% offset account. However, they faced the following challenges:
1: 1-Year ABN Acceptance: Bendigo accepted the self-employed applicant’s 13-month-old ABN, unlike many lenders requiring a minimum of two years.
2: Latest Financials for Servicing: We used the most recent year’s financials in isolation to assess serviceability, bypassing earlier financial inconsistencies.
3: Tax Debt Management: The small tax debt was included as a liability, not a deal-breaker.
4: Abnormal Expenses Adjustment: With an accountant’s letter confirming the expenses were one-off, these were added back to improve the financial profile.
5: Casual Income Recognition: The casual worker’s income was annualized based on their latest payslip and shaded to 48 weeks, acknowledging over two years of industry experience.

The Solution

By consulting with various lenders and comparing their policies, we tailored a solution specifically for this client. The suitable lender needed to offer flexible lending criteria, such as: 

1. Accepting a 1-Year ABN: Willing to consider a self-employed applicant with only 13 months of ABN history, overcoming the traditional two-year requirement.
2. Using the Latest Financials: Assessing borrowing capacity based solely on the most recent year’s financials, disregarding earlier unstable performance.
3. Tax Debt Consideration: Treating minor tax debts as part of the liability assessment rather than an outright reason for rejection.
4. Adjusting for Abnormal Expenses: Accepting an accountant’s letter to verify that unusual expenses were one-off, allowing for adjusted income evaluation.
5. Recognizing Casual Income: Annualizing the casual worker’s recent pay slips based on industry experience and projecting income over 48 weeks.

The Outcome 

 The clients were ultimately matched with a suitable lender, Lender B, and the right product — Flex XX — which offered a split loan structure with both fixed and variable rates, along with a 100% offset account. 

This not only resolved their immediate financial challenges but also laid a solid foundation for their future investment plans.

If you are considering applying for a loan, contact us for a free consultation, see how we could help you.