Self-employed couple saves more than $1,000 per month in repayments

Bert and Moira Goode* have run a dry cleaning business in Townsville since 2014.

The Goodes wanted to refinance their home loan given recent rate increases.

They also wanted to prepare their current residence to become an investment property, and eventually buy a home elsewhere once rates moderate.

The couple contacted a broker to learn about their options.

The Goodes outlined their needs:

• lower repayments

• funds to pay for renovating their current home so it can be used as an investment property

• funds to later buy a second property they will live in

The broker realised refinancing the Goodes’ owner occupied home loan from another lender to self-employed borrower specialists Resimac could provide benefits.

The dry cleaning business experienced volatile trading patterns during the height of the pandemic. This means its recent financials were not a true indication of how it was trading at the time of application.

For this reason, the broker helped the Goodes apply for a Resimac Prime Alt Doc home loan.

One of her first tasks was to prove Bert’s income. The business was registered in his name.

Through the Prime Alt Doc product specifications on BrokerZone, she learned income can be verified through a Declaration of Financial Status along with one of the following:

• accountant’s verification

• six months of Business Activity Statements

• three months of Business Bank Statements

The broker gained an accountant’s verification for Bert’s income.

Moira was a PAYG employee of the business and presented a simpler task of proving income.

The broker’s efforts helped the Goodes refinance to an owner occupied Prime Alt Doc home loan of $760,000.

This substantially lowered their repayments. 

The couple benefited from the Resimac promotion (available for a limited time) that waived interest only loading. This gave them the owner occupied rate of 6.74 per cent^ (LVR 80 per cent) on interest only repayments for five years.

Let’s compare their previous home loan with the new one:

 

	Previous home loan	Resimac Prime Alt Doc
Interest rate (owner occupied)	8.00%	6.74%
Monthly repayments	$5,503 (P&I)	$4,213 (IO)

A key feature of the Goodes' home loan was cash out of $350,000. This money served two purposes. The couple accessed this cash and started making non-structural renovations to their existing home to make it an investment property. The rental income from the investment property will help the Goodes later meet the larger principle and interest repayments.

The couple also accessed the money so they could buy a second property at a later time.

* All names and occupations are fictitious and are for illustrative purposes only.

^ Interest rate is indicative only and subject to change at any time. The interest rate may differ depending on borrower category, security use and how much is borrowed relative to the value of the property. Terms and conditions apply to all loan features and may be subject to erelevant fees and charges, where applicable.  Final approval is subject to credit assessment.