Don't have savings? We could help you buy your first home!
Young couple John and Kim were keen to start paying off their own home rather than paying rent, but had no savings. Here’s how they bought their first property.
John and Kim Wright were wondering why they were paying off their landlord’s mortgage instead of their own, but they didn’t have the savings or financial history to convince a lender to give them a mortgage.
After being declined by two lenders, one a big bank and the other a smaller lender that they thought they would have luck with, they contacted their local mortgage finance broker.
“During my initial discussions with John on the telephone, I asked him several questions to help me put the pieces of his jigsaw puzzle together,” says the finance broker. “And, on paper, it certainly didn’t look like a deal.”
As well as the lack of savings, the couple had a couple of other problems standing between them and a strong application: John had recently changed his employment and he had a small, paid default on his credit file.
At their first meeting with their mortgage broker, which was held at John’s parents’ home, they discussed their needs and objectives, and mulled over whether the only option for them was to create a savings plan in order to purchase at a later date.
“The parents sat in the interview and wanted a solution,” says John and Kim’s finance broker. “It became apparent that a family pledge loan facility may be an option.”
This would involve John’s parents offering their home as collateral security.
“However they already had a small interstate mortgage on their property, so a refinance of this loan was required,” their finance broker explains.
After seeking their own legal advice, John’s parents refinanced through John and Kim’s finance broker at a lower interest rate. As well as being able to deal with a local finance broker, they also eliminated fees they had been paying by moving onto a more appropriate loan type for their situation.
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