Separation Agreements Matter
With the volume of property bought and sold in Australia each week, you might assume getting a home loan is a straightforward process. Unfortunately, it’s rather complex. And not every lender approves applicants the same way, leading to some very different lending outcomes.
A mortgage broker understand what each lender is looking for and which one will suit your circumstances.
The disparity between lenders is such that there are a number of home loan mortgage comparison products — there’s Finder.com, iSelect; even Domain, the property website, has launched a comparison product with online lender Lendi — to help people find the best home loan, and see the forest for the trees.
The difference a good mortgage broker can make
Consider the following scenario, involving a first home buyer one a single income with two children.
Kate* is a divorced school teacher, with two children, who had been renting in Sydney. She previously sought finance with a mortgage broker and was pre-approved for $600,000, through the Teachers Mutual Bank.
However, the broker disregarded a separation agreement with her former partner, which stated all the childrens expenses were shared 50-50. The broker also didn’t correctly assess Kate based on her tax-free income.
It is common practice for many brokers to disregard separation agreements, despite being court-ordered, and instead assess the applicant’s income based on two dependent children.
Different broker, different processes
Kate tried another broker, who factored in both her tax-free income and the separation agreement, pre-approving her for $785,000 through the Teachers Mutual Bank — which was happy to account for only one dependent child.
With the help of some savings from her dad, Kate has since found a property and exchanged contracts.
Sometimes it’s not the lender
As Kate’s experience shows, sometimes the disparity between one loan application and another has nothing to do with the lender at all, but rather the person doing the assessing — the broker.
As it is with many things, it’s always good to get a second opinion, especially if you feel that the broker or lender hasn’t fairly taken your situation into account.
Of course, there are often many good reasons for this. In Kate’s case, though, she was able to show that her former partner had always complied with the separation agreement, so the risk she wouldn’t be able to service her loan was negligible.
Learn more about home loan mortgages and see what a good mortgage broker can do.
* Not her real name.