Big Deal

Publication Date: Monday, 14 October 2024
This article originally appeared in Australian Broker.

How a self-employed client effortlessly secured a $5 million bridging alt-doc loan to upsize into a dream home, avoiding income verification challenges and easing the transition between properties

The Facts

The scenario

After accumulating over a decade of experience in the IT industry, a self-employed IT professional established his own IT consultancy company two years ago. His entrepreneurial venture proved to be a resounding success, allowing him to pursue the purchase of a dream home valued at approximately $5 million. With his business thriving, he had already paid off his existing property valued at $2.5 million. When approaching traditional lenders, the client faced two options for purchasing the new property. The first option was to cross-collateralise the existing and new properties, borrowing $5 million, but this required income verification based on the total loan amount, which would have been challenging for him. The second option was to sell his existing property first and then purchase the new one – a process that would have been a huge hassle for the business owner and his young family due to the uncertain timeline and the risk of missing out on his dream home. Given his circumstances, the best solution was to secure bridging finance to purchase the new property while awaiting the sale of his current home. He turned to Brighten for a solution that would accommodate his requirements.

The solution

Understanding the urgency and specific requirements, Brighten provided a tailored solution through its Brighten Connect bridging loan product, featuring an Alt Doc Prime end debt option. This allowed the customer to verify income using alternative documentation. Since income verification was only required for the $2.7 million end debt, Brighten accepted a letter from the customer’s accountant as sufficient proof of income, eliminating the need to prepare detailed financial statements. Brighten approved a $5 million loan at 70% LVR with a fast turnaround, ensuring the customer could complete the purchase of the new property without delay.

This solution gave the customer the flexibility to focus on his thriving business while comfortably transitioning into his dream home. The customer was very pleased with the smooth process and relieved to have up to 12 months to sell his existing property. Upon the successful sale, he could pay down the bridging loan. More importantly, after discharging the sold property, Brighten would automatically convert the loan to a standard Alt Doc Prime loan at a lower interest rate, easing his long-term financial obligations.

The takeaway

Brighten Connect is specifically designed to help customers transition smoothly between properties, alleviating the stress and worry often associated with buying and selling at the same time. With a maximum loan size of $5 million, Brighten Connect offers the flexibility and support your clients need – whether they’re looking to upsize, downsize, take advantage of the current market, or avoid the hassle of finding a rental. A key feature of Brighten Connect is that it provides peak debt at settlement while only requiring income verification based on the end debt. Another advantage is that, during the bridging period, the interest budget is retained, and no repayments are required.

After the bridging period, the loan automatically converts to Brighten’s standard Full Doc Prime, Alt Doc Prime or Expat loan at a lower interest rate. For end debt income verification, Full Doc Prime accepts one-year financials and regular director wages, while Alt Doc Prime only requires one form of income documentation, such as an accountant’s letter. The flexibility and understanding demonstrated by Brighten highlight the lender’s commitment to providing tailored financial solutions that meet the unique needs of its customers.