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 used for Servicing: $426,614.51 |
Background
Connor Harman, a dedicated warehouse manager working for the Australian entity of a NASDAQ listed global retailer for over 15 years, was 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 Connor’s existing lender did acknowledge the RSU component, their overall remuneration assessment was still conservative. Therefore, the lender 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 first tackled the borrowing capacity concern that Connor’s initial lender presented. He leveraged his expertise and quickly recognised the key issue was the lender perception of RSU income.
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.
Romy also 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 first made contact with a lender and demonstrated the stability of the client’s RSU income, allowing them to meet servicing requirements. This resulted in a conditional approval of $2.19M, subject to valuation. While the valuation amount itself was acceptable, this particular lender raised concerns about the front-loaded structure of the building contract.
To address this, Romy worked closely with the client and their builder to amend the progress payment schedule multiple times. However, despite these adjustments, the lender still found the valuation structure unsuitable based on their policy. Undeterred, Romy explored options with another lender. Initially, the lender’s standard RSU income calculation did not meet servicing requirements.
After working closely with the lender, Romy was able to provide a more detailed financial assessment and a strategy that would reduce the risk to the bank. This resulted in the bank agreeing to the loan amount that Connor was after.
Secondly, to tackle the issue with front loaded build contract, Romy liaised with the builder (with Connor’s permission) to slightly adjust the progress payments schedule, then with the banker to highlight the build’s nature being unique with significant site costs, he was able to then convince the bank that this is low risk resulting in a loan approval that met the clients overall requirements and objectives.
The banker took a more personalised approach in reviewing the client’s income and overall financial position, which led to an approval for a loan amount of $2.6 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 $2.6 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.