A Quick Overview
| Details | Description |
|---|---|
Customer | Connor Harman |
Broker | Romy Dhungana |
Purpose | Refinance & construction, investment property |
Loan Amount | $2,640,000 |
Security | Eltham, North VIC, 3095 Property Value: $3,373,000 |
LVR, Term | 64.95%, 30 years |
Interest Rate | Split 1: $940,000 Standard Variable Rate, 30 yrs P & I Investment Everyday Offset Account at 6.47% Split 2: $1,700,000 Standard Variable Rate, 30 yrs P & I Investment Everyday Offset Account, Progressive Draw |
Income | Base Salary: $56,266 annually Cash Bonus: $58,200 annually RSU income: Vested FY Oct 2023: 794 shares = USD 416,889.70 Vested FY Oct 2022: 672 shares = USD 302,527.68 Average = USD 359,798.69 – AUD 533,268.13 (Exchange rate: 1.4825) Shaded at 80% = $426,614.51 (Income used for servicing) Rental income: Investment property MA’s sole ownership: Epping, VIC 3076 Rental income: $28,152 Proposed rental income: 2.5% of $3,370,000 = $84,250 |
Background
Connor Harman, a dedicated warehouse manager at a global retailer for over 15 years, looking for $2.6 million in construction funding for his existing property.
He applied with his current lender, but had difficulty meeting servicing requirements, as a large portion of his income came from Restricted Stock Units (RSUs).
Since his lender had a conservative approach to RSU income, Connor’s borrowing capacity was deemed insufficient. So, he needed a lender that could be more flexible.
Income Profile Emerged As A Major Impediment
Connor’s income profile presented a unique challenge.
While his base salary of $56,266 and cash bonus of $58,200 annually were stable, a substantial portion of his earnings came from (RSUs).
These RSUs were viewed cautiously by lenders due to their inherent market volatility.
His existing lender didn’t acknowledge the RSU component and deemed his borrowing capacity insufficient. This roadblock forced Connor to get in touch with Home Loan Experts.
Here were the major complications that had stopped Connor from securing a loan:
- Significant RSU income required special lender assessment.
- Loan consisted of refinance and construction financing.
- Front-loaded structure of the building contract.
The Solution
After Connor got in touch with us, our broker, Romy Dhungana, stepped up to this challenge, with the goal of finding a lender with a more nuanced understanding of RSU income.
Romy’s first attempt to solve Connor’s problems with another lender stalled due to concerns about the front-loaded structure of the building contract.
Despite repeated attempts to amend the progress payment schedule with Connor and his builder, the lender remained unconvinced. Furthermore, the complex nature of the loan – split between a land refinance and a construction loan – complicated matters even more.
Romy leveraged his expertise and tackled this challenge systematically. He quickly recognised the key issue was lender perception of RSU income.
To address this, Romy compiled a comprehensive application package consisting of:
- An Employer Stock Compensation letter confirming ongoing RSU grants
- 5 years of RSU vesting history demonstrating consistent stock-based income
- Detailed stock unit statements showcasing continuous RSU accumulation
Romy proactively addressed potential concerns by using conservative income estimates, demonstrating Connor’s repayment capacity even in a sharemarket downturn, and highlighting the stock’s stability as that of a multinational employer with a strong history of RSU issuance.
In addition, Romy also showcased his loan structuring expertise with a split strategy, separating the land refinance and construction loans, which aligned with lender policies and maximised Connor’s borrowing power.
After working closely with a major private banker, Romy and his team were able to provide a more detailed financial assessment. The banker took a more personalised approach in reviewing the client’s income and overall financial position, which led to an approval for $3.75 million.
This success underscores the importance of Romy’s deep understanding of lender policies and his ability to articulate Connor’s financial strength for loan approval.
Want To Use Your RSUs For A Home Loan?
RSU income, while valuable, can pose a hurdle when applying for a home loan, due to its perceived volatility.
Many lenders are hesitant. However, experienced mortgage brokers, like Romy at Home Loan Experts, can help.
Romy Dhungana secured a $2.7 million loan for Connor using his RSUs. Mortgage brokers at Home Loan Experts possess the expertise to navigate RSU-backed financing to help you achieve your homeownership goals.
Call us today at 1300 889 743 or complete our free online assessment form and let us help you.