Hi there,
we have found out with 3 hours to go until approval is required that our request for a low doc (70%) loan has been disapproved through Bankwest. Our business has been going for 3 years (as a family trust) and the loan was put under my husbands personal name. The 18 year old lending manager is now telling us that the bank won't lend due to the business being set up in a trust (even though the home loan won't be in one). He doesn't seem to understand anything we ask and won't put us on to the manager.
Can anyone provide any advice on this please as we thought as long as the loan/house in in our personal name it doesn't matter what the business is set up as as long as it has been running for more than 2 years.
We had an extension due to the incompetent lending manager and now he gives us this info with less than 3 hours to go. I have rung 3 brokers asking for their advice and waiting for call backs
please help!
Thats my understanding too.
They require you to prove you have been self employed for 2 years to qualify for a Low Doc. Self employment can be as sole trander, thru a company or thru a trust. You prove the length of self employment by the date of registration of the ABN. You will also need GST registration if your income is $75k pa +.
Who is the trustee of your trust?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
the Trustee is my husband and we have also put the personal home loan in his name. I think it is truly coming down to the person we are dealing with otherwise it would mean that n one could get a low doc loan if their business was set up as a trust. I think he went to his manager (after the LMInsurer said 'no' after incorrectly saying we had our business for less than 2 years) and his manager has jumped straight on the bandwagon of "they can't get approval if in a trust" without actually realising it's not going in to the trust. We have had nothing but issues
Yeah, BW don't like trusts. but if the trust has nothing to do with the purchase it shouldn't matter. I can't see why it would be rejected on this basis.
Maybe try ringing up their hotline and see how you go – ie bypass this person.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
It can proceed in a trust. Can you provide 12 bas?
What is your annual turnover and what does the business do?Banker,
we don't have finances in order/up to date BAS so we are going low doc. income is well and truly sufficient to cater for it though.He's been running business with ABN for 3 years, 3 months
Lots of lenders out there who would do it without BAS or Trading Statements but unfortunately BW is not one of them.
Richard Taylor | Australia's leading private lender
Richard,
even a low doc….? we've never been asked for BAS statements and gave ABN details to show the running of the business for 3 years.have tried to ring the help line twice as this fellow won't even get back to us and they just keep putting us through then he makes an excuse to not talk and says he will ring us back (has told us this 6 times today now)…ewwww!
Sarah
Yes Bank West will not lend to Trusts on LODOC full stop.
I am suprised the Mortgage Broker or Bank johnny who put your application together even suggested BW as an option as their policy is fairly clear they will not do in TRUST.
Richard Taylor | Australia's leading private lender
I will be the first to put up my hand and say these deals confuse me a bit. Banks accept declarations in some cases up to 80% of turnover from bas statements. Then lend 80% on low doc. If you not a rating 1 or 2 client in terms of risk grade banks still accept 40% of turnover as a declaration. It is only a few like liberty that actually calulate the TO less wages and general expenses etc when looking at bas.
This means you can declare 200 – 400k if you turnover 500k even if your bas show you make a loss.
If you do have a successful business you can’t survive without doing BAS??? – you must owe GST and have fines accumulating which starts to promp questions about ability to manage financial commitments.
Banks bought in bas requirement on low doc to confirm a trading business exists. Your problem with BankWest might be the if the trust is set up for investment rather than being a trading business. If this is correct they have a valid point. E.g not elligible for low doc.
Not trying to be negative – this is why industry and turnover are relivant.
Richard – don’t think they are looking to borrow in the trust . The borrowing is in his name and the business operates through a trust… E.g it is where the income is.
Sarah – without disclosing details can you tell us what the business does?
Ok my misunderstanding i was under the impression the loan was to be in the name of the Trust.
Richard Taylor | Australia's leading private lender
hi again,
the business is a photography business and we had hoped to go for a low doc for various reasons really – have a couple of BAS's outstanding etc
well, we since found out today (and would love to be corrected) that there is no lender now who will lend above 60% low doc unless 2 years financials are given. According to the broker I spoke with the last was wespac who did above 60% in Jan.
Last i looked Suncorp will still do 80% Low Docs without BAS. Others out there too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
21 Jan email from bankwest:
No BAS Statements Required for Low Doc Home Loan
- Non-LMI Deals (LVR <=60%) require customers to have registered ABN for a minimum of 1 year.
- LMI deals (LVR 60%-80%) require the ABN registration for a minimum of 2 years;
- Customers' claiming income of >$75k will be required to have their GST registration in place for the same length of time as their ABN (minimum of 1 year for non-LMI deals / 2 years for LMI deals)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Sarah
I would be switching Brokers.
There are many lenders out there who will do a 80% (even 85%) lend on a purchase and not require BAS or Bank Trading Statements.
Actually had 2 approved today for a forum clients. 1 Refinance with cash out and the other a new purchase.
Richard Taylor | Australia's leading private lender
Hi Richard,
Are you able to work on this for us? what is your timing on these things (as we are very pushed due to the extensions already and BW)?
cheers
Sarah
Hi Sarah
Dont have much information so if you wanted to email me up the basics i can tell you more.
Richard Taylor | Australia's leading private lender
Sorry Terry – have just seen your response. I've got no idea really! I truly think the guy at BW literally stuffed up. This afternoon I found out it came down to a clerical error of him writing we had our business since 2007, not 2006 so we didn't have 3 years on the LMInsurer's application. They weren't willing to reassess and he was scurrying to cover his erro thus possibly making up the 'trust thing'…
very much over it that's for sure!
Sarah i have just answered your email.
Looking at 6.48% on Lodoc 80 without any form of BAS or Trading Statements.
Richard Taylor | Australia's leading private lender
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