When the Numbers Don't Tell the Whole Story
Some clients come to us because their situation looks complicated on paper. This case study is one of them, and it's a good reminder that a loan application is never just a set of numbers. It's a person's life, and sometimes it takes a bit more effort to help a lender see that.
The situation
Our client is a single parent with one dependent child. Her income comes from a mix of sources, Family Tax Benefit A and B, income as a sole trader, and Parenting Payment. A few years ago, a previous broker placed her with a non conforming lender, because it was the only option available to her at the time. Very few lenders accept Parenting Payment as income at all, and without it, her loan simply didn't service.
She had a small mortgage and had been sitting on a higher rate ever since, because refinancing looked out of reach.
Looking beyond the policy
Most lenders see Parenting Payment and stop there. But we asked the question anyway, because sometimes it's worth understanding why a policy exists rather than just accepting it.
Her child is seven. Right now, our client works around school hours and takes school holidays off, because there's no other option for care. But a seven year old doesn't stay seven. As her child gets older, our client will be able to take on more work, and her income will grow. Parenting Payment is designed to reduce as income rises, which meant her reliance on it was never going to be permanent, it was going to shrink as her working capacity grew.
We wrote to a lender and laid out that story. Not just the numbers on the application, but the trajectory behind them, why the income mix looked the way it did today, and why it wouldn't look the same in a few years.
The outcome
The lender agreed, and the loan was approved. We moved her from her existing rate to one around 1 percentage point lower, saving her a few thousand dollars a year, real money back in the hands of a parent who's building a life for her family on her own.
It was also the smallest loan we've ever settled. The work involved in building the case and writing to the lender took real time, more than the commission on a loan this size will ever cover. We did it anyway, because that's the job. We back our clients, not just their payslips, and we believe every client deserves a broker who takes the time to understand their story, no matter the loan size.
If your income doesn't fit a standard lending policy, whether that's government payments, sole trader income, or something else that doesn't sit neatly in a box, our Refinancing, Self Employed Home Loans and Low Doc Home Loans pages are a good place to start, or get in touch and we'll talk through what's possible for you.
This case study is based on a real client scenario. Details have been adapted for privacy. Loan approval is subject to individual circumstances and lender criteria. This information is general in nature and does not take into account your personal financial situation. Please speak with one of our brokers to discuss what's right for you.
