Settled Scenarios

COMPLEX GROUP STRUCTURE

Investment purchase across a twelve entity group

Group principal of twelve corporate entities, most of them loss making, buying a residential investment property in regional NSW.

$1.7m

LOAN AMOUNT

Investment

SECURITY

12 Entities

ASSESSED

THE STORY

The file, in three parts

What the broker brought, how the credit analyst read it, and what settled

01 · The challenge

The applicant was 61, based in regional NSW, and the group principal for twelve corporate entities. His work involved advising distressed businesses through voluntary administrations, insolvency trading and restructures. He sought $1,500,000 to purchase a residential investment property. On paper, the group looked difficult: most of the entities were carrying losses to June, and only one reported a net profit of $180,000. He also held personal mortgage commitments alongside the corporate debt, which made the servicing picture hard to read from the financials alone.

02 · How VMG assessed it

Human underwriting separated what the applicant was personally responsible for from what the entities carried. The net profit of $180,000 from the profitable entity was taken as the base, and addbacks across the other entities totalling $540,000 were applied to build the income position. Rental income from five existing investment properties was included, together with the future rental on the property being purchased, shaded at 85 per cent. The negative gearing addback was factored in. Corporate debt held by the entities was excluded from the servicing calculation, because those obligations did not sit with the applicant personally. The loan was structured with three years of interest only repayments followed by principal and interest over the remaining 27 years.

03 · The outcome

VMG settled at $1,700,000, above the $1,500,000 the applicant had originally sought. Reading the group structure properly rather than stopping at the consolidated loss position produced a stronger result than the file first appeared to support.

THE TURNAROUND

Before and after

The same file, before the refinance and at settlement.

BEFORE VMG

Twelve corporate entities, most carrying losses.
Only one entity was reporting a net profit.
Personal mortgage commitments sitting alongside corporate debt.
Servicing is difficult to demonstrate from the financials as presented.

AFTER SETTLEMENT

Net profit and $540,000 in addbacks used to build the income position.
Rental income from five existing properties plus the new purchase, shaded at 85 per cent.
Corporate debt excluded where it was not the applicant’s personal responsibility.
Interest only for three years, then principal and interest over 27 years.

💡THE VMG COMMON-SENSE ADVANTAGE

A group carrying losses is not the same as an applicant who cannot service. The question is which obligations actually sit with the person on the application.

HOW IT WAS ASSESSED

Human underwriting

Every file is read by a credit analyst, not scored by a system. There is no credit scoring, and no DTI or DSR ratio applied. The product and the terms depend on the individual file, so talk to your BDM about where a similar scenario fits.

Have a similar file?

Test the scenario with VMG credit before you lodge. VMG lends only through accredited mortgage brokers.

More settled scenarios

FUTURE INCOME STREAM

Using Future Business Sale Proceeds to Secure Property Purchase

Owner occupied purchase supported by PAYG salary and the remaining tranches of a business sale being paid out over five years.

$1.8m

LOAN AMOUNT

Owner Occ

SECURITY

5 years

SALE TRANCHES

LOW CREDIT SCORE

Consolidating seven loans on a low credit score

Seven loans consolidated for a borrower with a low credit score, all repayments current, after the file had been declined elsewhere.

$508k

LOAN AMOUNT

7 Loans

CONSOLIDATED

$525

MONTHLY REDUCTION

DEBT CONSOLIDATION

Consolidating eight loans after a separation

A tradesperson left solely responsible for eight loans after a separation, with repayments slipping as rates rose.

$552k

LOAN AMOUNT

8 loans

CONSOLIDATED

$1,290

MONTHLY REDUCTION

QUESTIONS

Frequently asked questions

How does VMG assess an applicant who controls multiple entities?

Credit works through the structure rather than around it, establishing which entities generate income for the applicant and which debts they are personally liable for. Debt serviced by an entity in its own right and not guaranteed personally may be excluded from the applicant's servicing calculation. A clear group diagram and current financials for each entity will move a file of this type along considerably.

Will loss making entities within a group stop an application?

Not automatically. Losses are examined for what is driving them, including whether they reflect depreciation, one off items or genuine trading decline. Addbacks are considered where the financials support them. A group that shows losses in aggregate can still contain a clear and evidenced income position for the applicant.

Is applicant age a barrier on a thirty year term?

Age is not a bar in itself. Credit will consider the exit strategy alongside the term, including asset position, superannuation, and the applicant's stated intentions for the property. Structures such as an interest only period followed by principal and interest are available where they suit the file. Discuss the exit position with your BDM before lodging.

All applications are subject to Victorian Mortgage Group’s standard credit assessment and lending criteria. Terms, conditions, costs and charges apply. This article is general information only and does not take into account your objectives, financial situation or needs.

Investment purchase across a twelve entity group

$1.7m

Investment

12 Entities

The file, in three parts

Before and after

Human underwriting

Have a similar file?

More settled scenarios

Using Future Business Sale Proceeds to Secure Property Purchase

$1.8m

Owner Occ

5 years

Consolidating seven loans on a low credit score

$508k

7 Loans

$525

Consolidating eight loans after a separation

$552k

8 loans

$1,290

Frequently asked questions

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