How this broker helped a self-employed borrower settle a $3.35 million property purchase
Melbourne went through a challenging period of lockdown last year after a second wave of COVID broke out in June. While the Delta variant has sent the nation’s second largest city into lockdown again in 2021, growing vaccination numbers have provided a light at the end of the tunnel as the country readies itself to live alongside COVID. But, back in 2020, there was a long period of time when Melburnians questioned when they would ever be able to freely leave their homes again.
It was during this period that Damien Roylance (pictured), founder and managing director at Entourage Finance, was given a documentation request that he had never received before. Ironically, the lender was a non-bank renowned for its low doc offering. But as times were unprecedented, so too were the things brokers had to do to prove their clients’ serviceability.
The client was a furniture maker who also traded soap. As a shortage in hand sanitiser emerged, the client was able to leverage this opportunity as well as the growing demand for furniture that came from a population stuck at home.
“He was able to do click and collect and he pivoted pretty quickly to sell furniture,” Roylance said. “He was almost doing better during COVID.”
After working more than 30 years in his trade, the client had been ready to purchase his dream house – a $3.35 million property in the affluent bayside suburb of Beaumaris. He entered into an off-market arrangement and agreed to purchase the five-bedroom property. Fortunately, the vendor agreed on a flexible settlement, as not long after Roylance lodged the application for the $2.2 million loan with 65% LVR with the lender, Melbourne went into lockdown.
It was then that the client quickly and successfully pivoted his businesses, but even though trade was thriving for the client, the lender in question took a risk-adverse approach to assessment.
While Roylance detailed to the lender that the client had been self-employed in business for 40 years and had significant cash reserves while having been through other major economic cycles like the GFC, the assessors queried the capacity at which the businesses were still operating.
“This was the main sticking point in the assessment,” he said. “What should have been a low doc process, the normal low doc requirements being the accountant income declaration and client self-declaration, the lender had gone further in requesting 30 day bank statements and BAS.”
But the requests didn’t stop there. The lender also requested time stamped photographs of the client’s staff while they were working at the factories to prove the level of operation during lockdown.
“We also sent them 10 certified lockdown work permits for staff to prove their onsite attendance,” he said.
According to Roylance, he had never been asked for this level of documentation before.
“It’s the most unique loan I’ve ever done,” he said. “The assessors being assessors, they look at the risk adverse side of things. They look at what could go wrong, what could go right.”
Roylance even invited the regional manager of the lender to visit the factory, which was politely declined.
“In the end we had to wait until the lockdown ended and then a week after the lockdown ended, we got it approved. But we were constantly going back and forth with the assessor.”
All in all, it took six months to take the deal from submission in June to settlement in December.
“It was a nice little Christmas present for him,” said Roylance. “In the end it was really fulfilling for us.”
The client was able to settle on his dream home and has been back to do business with Roylance since.
“He loved us,” he said of the client. “He’s an experienced guy, he’s had a few businesses, seen a lot of business ups and downs and he knew we were fighting for him behind the scenes. Credit to him he kept providing everything we needed. He knew it was the best option for him and got the outcomes he wanted.”
While Roylance was confident the deal would go through eventually based on the feedback from BDMs, much of it came down to when lockdown would end – something no-one had a clear idea of at the time.
“He knew he was in the best hands possible,” he said. “We’d explored all the options before we submitted, we just timed it wrong with going into lockdown just after we submitted. The world changed down here, and credit’s risk appetite changed. We just had to abide by the rules until we got out.
“We’d never seen anything like it in terms of people asking for the sort of stuff they did.”