Background
A middle-aged couple with two dependents were wanting to purchase a section in Central Otago. They already owned an almost complete unencumbered residential property in the same area.
Challenge
The broker had sought lending from mainstream banks but had been declined due to the reliance on using the clients’ available funds and savings to satisfy affordability requirements. The clients had available funds of circa $100,000 set aside to meet their interest only repayments and living costs.
Mitigants
- Satisfactory credit profiles and good account conduct
- Low LVR of 43%, providing a good security margin
- Affordability mitigated, with applicants having available funds of $100K, which will more than cover the interest only repayments and living costs for the 7-month period requested (of approximately $81,500).
- A viable exit strategy being the sale is secured against their landowner-occupied property.
Solution
Short-term interest only loan provided, with the mitigant that the clients had available funds to assist with servicing the short fall.
Loan amount: $855,165
Interest rate: 12.2%
Term: 7 months interest only
Avanti fee: $705
Adviser fee: $8,460
Interest rate: 12.2%
Commission paid: No commission paid on short-term products
LVR: 43%
Rates and fees were valid at the drawdown of the specific loan facility in each case study, new loans are subject to the rate at application. A copy of our current rates and fees can be found here.