Forums / Getting Technical / Finance / credit history, self-employed & loan

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  • Profile photo of hisshohissho
    Member
    @hissho
    Join Date: 2003
    Post Count: 14

    hi all

    my partner and i are self-employed with a history of less than a year. we’re working very hard(cash income) to earn and save so that we can start to invest.

    i realised the importance of credit history and successfully got a free report from Baycorp Advantage. anyway i didn’t find anything valuable there. just a list of what organisations have inquiried my credit record…

    my questions are:
    1)is the information I got from Baycorp sufficient to determine if someone has a good credit record? do banks/financial institutions use Baycorp as well?

    2) my partner has got a blank credit record, since all the mobile phones/bills etc are under my name. is this very bad in terms of getting a loan sometime in the future?

    3) i know there are low-doc loans out there, but would it still be very hard for self-employed people like me to get such a loan? i’ve approached a friend’s friend who is a broker and unbelievably the answer from her was “we can arrange to make up something for you…”. i don’t think this is an approach that i should take, although i know some people are doing this coz they have good cash income, pay little tax and are comfortable paying back loans but just couldn’t get a loan from traditional financial institutions.

    your comments/help would be greatly appreciated.

    hissho

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    hissho, a clean record is far better than one showing defaults etc.

    There are a number of excellent brokers on this forum. I suggest you contact any one of them privately so that you can give them more details and they can outline your options for you.

    And yes, banks check your baycorp file. Each time you put in an app, they will probably check your file, and add that you have applied, so there will be another transaction on your file.

    Cheers
    Mel

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hi Hissho,

    A clean record is just as good as a blank record, as long as you dont have any blackmarks against your name or your partners name, much more easier to get a loan approval than being run around the bush for having a small, smudge against your name that can cause unwanted problems and delays, of such loan approvals you wish to apply for.

    cheers,
    s.i.s

    “People 4 get that by saving just $3 aday & investing it sensibly over a working life, you’ll end up wit around $1 million.”

    Profile photo of hisshohissho
    Member
    @hissho
    Join Date: 2003
    Post Count: 14

    Thanks for your help folks. how about my other questions?

    cheers
    hissho

    Profile photo of thefirstbrucethefirstbruce
    Member
    @thefirstbruce
    Join Date: 2003
    Post Count: 133

    Hissho,

    If you go low doc, 3 brokers have assured me in the last 6 months that all you need is a 20% deposit. They don’t want specifics on whether you have the income to service the debt (such as P&L statement, tax returns). They consider the property and your 20% will cover potential losses.

    THe documentation and criteria I was asked for are:
    – a clear or unblemished credit history.
    – proof that I have the 20% deposit.
    – copies of the last three bank statements and credit card statements.
    – list of assets.

    Upon this info, I was gauranteed an 80%LVR loan.

    The 2 lenders that came out best were Adelaide Bank and Rams.

    These two loans revert back to the std variable rate after 2 years. i.e. when you have shown you can service the debt.

    If you feel there is a good opportunity for growth now, it is worth getting a low doc loan, rather than waiting until you have been self employed for more than 2 years. The interest rate differential between standard and low doc was about 0.4% in my case.

    Bruce
    Mooloolaba, Qld

    Profile photo of picja1picja1
    Member
    @picja1
    Join Date: 2003
    Post Count: 144

    To clarify things for you.

    Lo – Doc loans

    The main Lo- Doc’s through A lenders require min 2 yrs self-employed or investor, however, you do not need to provide ABN, so people can get away with less. This is what firstbruce is suggesting.

    However, there are lenders who provide finance to self-employed and they only have to be applying for an ABN, yes that’s right,hasn’t even traded yet. These loans are obiviously at a higher rate and will only go 85%LVR, where,with more than 12 months trading you could go to 90% LVR and with more than 2 yrs 95%LVR, still at the higher rates. Providing tax returns after 2yrs you could apply for the 100% products that are only 0.3% higher than the standard variable. However Lo-Doc loans are generally the most suited to self-employed and investors.Well, the preffered structure.

    Adeliade Bank is not toobad, very competitive, however there are some a bit better. I would have to dissagree with RAMS, as their break costs are 2% and have an half yearly fee, that is $96, approx $16 p/m.

    Most Lo-Doc’s revert back to the standard variable after 2 yrs. Some lenders are the standard variable, however these lenders put harder criteria’s and are longer in their process time. Require more statments like credit cards and lower LVR’s and min net assest’s.

    In regards to providing financials, you should only need to provide a Statement of affordability, 100 points ID, Rates Notice/Purchase Contract.

    Credit Rating, well I think you’ve had this answered. But to add to it, if you had defaults,
    you may need to approach a non-conforming lender, their rates are generally 2% higher than the banks. This does depend on the defaults though, some start at 6.6%.

    In regards to partner, No.

    If you would like any further information, borrowing power, the best lender and rate for, email:

    [email protected]

    Profile photo of thefirstbrucethefirstbruce
    Member
    @thefirstbruce
    Join Date: 2003
    Post Count: 133

    Thanks for that too picja1.
    I chose Adelaide Bank for one of my loans because of the high exit fee of RAMS.
    Are you a broker?
    The ones I spoke to were in Brisbane.
    Is there much interstate variability in what is made available through brokers?

    Bruce
    Mooloolaba, Qld

    Profile photo of picja1picja1
    Member
    @picja1
    Join Date: 2003
    Post Count: 144

    Bruce
    Yes I am a broker. In the same area as you, Sunshine Coast.

    I am with an national comapany and there is only few differences within states. Mainly, difference of lenders for each state. Generally, no difference of rates, with the exception of some. For example, Adeliade Bank in QLd is sent through to many different mortgage managers who set different rates, however in SA you go direct to Adeliade bank.

    [email protected]

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