4 differences between a credit adviser and a bank lender
Case study: everything that can go wrong, will..
When Bronwyn set out to build her dream home, luck was not on her side. In fact, it was an all-round disaster zone.
At 63 and with a couple of investment properties under her belt already, Bronwyn was ready to demolish her home and rebuild as a dream home for herself, her daughter Lisa and her daughter’s partner Rob.
She didn’t expect to run into any trouble; after all, she’d been through all the process of securing finance and purchasing property before. She visited her bank and, after a slight drama when the bank couldn’t locate the title deed to her unencumbered property, had a verbal confirmation that a loan had been approved.
She demolished her home, excited at the prospect of a fast construction and getting into the new house.
Then, the bank called. Her finance had actually been declined. To compound the problem, the demolition bill had skyrocketed when asbestos was found in the property.
Bronwyn was referred to an FinanceCorp Finance Manager to try to sort out finance.
“She was living in a caravan on the front lawn of the daughter’s house next door at the time,” Bronwyn’s Finance Manager recalls. “It was really difficult for her, $50,000 out of pocket and living in a tent and caravan on her daughter’s front lawn, and staring at her vacant block of land next door.”
Arranging the loan at that point was slightly complicated because many lenders won’t look at an aged pensioner, but with the other properties as security, the loan was finally approved – formally, in writing.
The builder poured the slab on the block of land, kicking off construction, and promptly went broke.
“It just got better and better,” quips Bronwyn’s Finance Manager. There was one piece of luck though: “A day before we were going to disburse the funds for the slab, we received confirmation that the builder had gone broke, so we were able to stop the transaction.”
Meanwhile, Bronwyn was still stuck next door for a few months, while her Finance Manager tackled the problem of having the loan agreement amended to allow completion of construction with a new builder – with the slab having gone down, it was technically a partially constructed house.
An even bigger problem was the fact that the builder had arranged frames and windows from contractors who were also set to be out of pocket.
“We had to negotiate with the lender to bring in a new builder, and then with that new builder to utilise the contractors who already had the frames and windows,” Bronwyn’s finance manager explains. He also got involved in the insurance tussle when the original builder went broke, liaising with a legal team when the insurer was, in his words, “bucking a bit”.
While this is more involvement than a Finance Manager would usually have in the process, the Finance Manager describes the chance to pitch in and solve problems as highly rewarding.
“We do usually get involved with negotiating with the builders, but not usually to the extent where we get involved with their subcontractors,” he says. “It was a fairly complex one, but it was pleasing that, when we had these obstacles come up, we were able to negotiate with all the different parties to get the desired result.”
The desired result was the completion of construction, so now Bronwyn lives in her dream home and is renting out another two investment properties in the same street. Two years on, she is looking for opportunities to expand her property portfolio to increase her rental income.
“While we are here to make a living, the part that gives you most pleasure is seeing the smiles on people’s faces when you overcome these obstacles,” her Finance Manager says. “I think when you step into that void and fill the gap you’re doing a lot more than what a bank can offer, and it’s a pleasure coming to work, because you know you’re making a difference.”
*Names have been changed to protect clients’ privacy.
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