Hi Everyone
I’m working to do wraps with some clients – a family of 4 adults and no dependents. One in on dsiability pension (he is wanting to have the house in his name), another on aged pension, another on carers pension and one working.
Together they have enough to buy a house (amount of deposit yet to be confirmed) but I’m wondering how banks will see this situation of a pensioner funded loan in 1-2 years time, when I expect them to refinance. The one who is working is currently 54 years old.
Thanks for your opinions on this
Jen[happy3]Jen
I have wrapped a house in a similar situation.
I have never anticipated that they would be refinancing quickly, I always expected they will be a long term cashflow buyer. So far that has been true.
There’s been some good equity growth in their house though, and I have certainly referred them to a broker to discuss their options (including the possibility of me taking back a 2nd mortgage if they can borrow 80%). They don’t want to – they’re quite happy with our arrangement.
Go figure!
Anyway, my point is – if you take on these buyers, do it because you’re happy to have them there long term!
If they move on quicker, that’s a bonus.
Keep smiling
Felicity
I also have wrapped to someone on a disability pension. It is also a long term thing with a quick refinance very unlikely. My ‘tenant’ has been behind in the rent, and it would be very hard for me to kick her out as I sympathise with her. I could get tough and legally do it, but…
That is why I would never do it again.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]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
I just can’t bring myself to do it – you guys must have nerves of steel, in my mind these people should be avoided at all costs, very desperate !!!!!!
Thanks for everyone’s comments. Nerves of steel huh?
I’m just thinking of how to mitigate this risk. What does everyone think of my establishing a short term loan, say 10 years, during which time I would guess the mum may die and her and her carers pensions would go too. At least the principle would be more significantly reduced and I could ‘refinance’ them on their new circumstances. Of course if there’s such a circumstance too soon after the wrap, there won’t be much principle gone … maybe I need to talk to the mum’s doctor!!!!
Best to all and thanks
Jenresiwealth – I’ve learn’t my lesson.
Only a fool learns from their own mistakes, a wise person learns from the mistakes of others.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]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
Hi Jen
Pretty much whichever way you look at it, these clients are unlikely to get anything other than vendor finance in the forseeable future.
On that basis, you’ve got to decide whether a Long Term positive cashflow wrap suits your business plan.
If it does, great, you’ll probably have these people on your books for the next 25 years (baring all the “challenges” mentioned above).
If it doesn’t I guess you could just move on or possibly pass these potential clients onto a wrapper who is looking for this type of client, for some form of commission.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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