The deal your client's bank or cash flow lender just declined
When serviceability is the problem and the equity is not, we can usually help. HomeSec funds its own loans, so the person who assesses your scenario is the person who can say yes to it — and the term is open, so your client is not signed up to a date they may not be able to meet.
Or send it straight to the desk — [email protected], or 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.
When cash flow lenders cannot help
Irregular income, a seasonal business, a year that looks wrong on paper, a tax debt still being worked through — each of those is enough for a serviceability-based lender to decline.
None of them tells you whether the loan will be repaid. We look at the equity in real property, and at whether the purpose and the exit hold up.
That is a different question, and it has a different answer more often than brokers expect.
A person decides every loan. Every application is read by a Lending Manager and every credit decision is signed off by a person. We do not use artificial intelligence to assess, approve, decline or price a loan. An algorithm cannot see why the last two years look the way they do. A person can, and that is the whole reason files we write are ones a scorecard would have rejected.
Be the broker with the solution
A decline is the moment a client finds out whether their broker has anywhere else to go. Two common versions of it reach us: the client who was declined outright, and the client who was offered a fraction of what they need. Both are the same problem — the first lender looked at the account, and the answer was in the property.
Bring that deal to us and you are the broker who found the way through, not the broker who passed on the bad news. You keep the client, your brokerage is paid the same day funds are released, and where the equity supports it the client gets the amount they asked for.
Why the first lender said no
These are the reasons we hear from brokers after a decline. Notice that none of them says the deal is bad. They say it does not fit a template built for steady takings and clean files.
- Serviceability. The client's income, as the lender's model reads it, does not cover the repayments on the amount asked for. The property can be worth three times the loan and it makes no difference to that calculation.
- A year that looks wrong on paper. A bad season, a big job paid late, a one-off write-off. The financials say the business is weak; the broker knows it is a timing problem.
- Irregular or seasonal takings. Tourism, landscaping, farming, construction. The account runs lumpy by nature, and a system reads lumpy as risky.
- Credit file. A default, a judgment, arrears, or a file that is simply thin. Below the lender's cut-off the application stops without a person reading why.
- A tax debt still being worked through. An ATO payment plan or a debt on the way to one is a decline reason at most banks and cash flow lenders. For us it is often the reason for the loan.
- Too little trading history. A new entity or a new ABN. The lender wants six to twelve months of bank feeds the client does not have yet.
Your client can read a plainer version of this on what to do after a cash flow lender says no, which is safe to send on.
An unsecured cash flow loan and HomeSec, side by side
An unsecured cash flow loan is sized on the client's account, because the lender has no property to fall back on. A loan secured against real estate is sized on the equity. Same client, different question, and often a different answer.
| A typical cash flow lender | HomeSec | |
|---|---|---|
| What sets the amount | Usually the client's account turnover or trading history | The equity in real estate, and a clear exit |
| Who decides | Often a scorecard or model first | A Lending Manager reads the file and a person signs off the decision |
| When repayments start | Often almost straight away | Up to 6 months with no scheduled repayments, as interest can be capitalised |
| How repayments are collected | Commonly by daily or weekly direct debit | No daily or weekly direct debits |
| Credit file | Often a minimum score | Considered, and never disqualifying on its own |
| Term | Usually fixed at the outset | Open term, from one month, chosen by the borrower |
The left-hand column describes the general pattern in cash flow lending; individual lenders differ. HomeSec terms are subject to approval and the loan documents.
Six months of breathing space
The part clients feel first is the repayments. Many cash flow lenders start collecting almost straight away, by daily or weekly direct debit, so the money the client borrowed to get through a gap starts leaving the account before the gap has closed.
HomeSec can capitalise interest for up to 6 months, so there are no scheduled repayments in that time. The client gets the funds, then the months to use them: to deliver the contract, collect the debtors, settle the sale or complete the refinance. After that the facility continues on monthly interest-only payments for as long as it is needed, and can be repaid in full at any time with no early repayment penalty.
"You asked for $400,000 and were offered $50,000, because the offer came from your bank account. This lender looks at your property instead. You can borrow what you need, and you will not be paying it back from week one."
Files like these, in the shape brokers bring them
It happens often. A client has the equity in a property but would rather not use it, so they go to an unsecured cash flow lender first. The lender can only lend what the account shows, and the offer comes back at a fraction of the need. These are files we have done, in different amounts, with the details changed to protect the clients.
Every file is assessed on its own property, purpose and exit, and nothing here is an offer, approval or quote.
Wanted $400,000. The cash flow lender offered $50,000
The client runs a trade supply business and needs $400,000 to take on a large contract. They had not wanted to use their property, so they went to an unsecured cash flow lender first. Working from the account, it offered $50,000.
The client owns an investment property worth $1,200,000 with $400,000 owing. At 80% of value, the room under the loan-to-value limit is $560,000, so $400,000 sits inside it.
We assess the equity, the purpose and the exit — here, payment for the contract. The amount is set by the property, not by what went through the account last quarter.
How it can work: The full $400,000, secured by a second mortgage, with interest capitalised for up to 6 months so there are no scheduled repayments while the contract is delivered and paid.
A cash flow loan with daily debits is strangling the business
The client took a cash flow loan to cover a quiet patch. Daily direct debits started in the first week and are now eating the working capital the loan was meant to provide.
The business is sound and the director's home has substantial equity. The problem is the repayment structure, not the business.
A secured facility can pay out the cash flow loan and leave working capital on top, with no daily or weekly direct debits. The client gets back the cash flow the debits were taking.
How it can work: The cash flow facility paid out from the new loan, working capital released, and up to six months before a scheduled repayment is due.
A seasonal business declined for lumpy takings
A seasonal operator was declined by a cash flow lender and two banks because the account looks uneven. The business owns its premises, commercial, with a moderate mortgage.
Commercial security is lent against at up to 70% of value, less what is owing. If the numbers work, the seasonal shape of the account does not enter into it.
Because the term is open, the client is not signed up to a date that falls in the off-season. They can reduce the loan when the money comes in, from $10,000 at a time, with no penalty.
How it can work: A first or second mortgage over the premises, repaid on the client's timetable rather than a lender's.
The bank declined on serviceability after an ATO plan
The client has an ATO payment plan in place and a refinance is stalled. The bank's serviceability test no longer works, and a settlement date is close.
We do not run a serviceability test. We look at the property, the purpose and how the loan is repaid, and a tax debt is usually a reason for the loan rather than a reason against it.
The sequence brokers use here is a fast second mortgage first and a longer-term refinance afterwards, once the position has steadied.
How it can work: Funds released against the equity, the ATO position dealt with, and time to arrange the longer-term refinance properly.
How to run a declined deal with us
- 1Call or email the desk with the Simple Seven.Minutes, not documents. An indicative yes or no usually comes back the same call.
- 2Lodge it, or let us lodge it for you.Photo ID, a rates notice and the most recent mortgage statements. About fifteen minutes.
- 3Funds released.As little as 24 hours from a clean, complete scenario, and your brokerage paid the same day.
The seven details: what the security property is roughly worth; the property's address; what is owing on it, and to whom; how much you want to borrow; how long you want it for; how many people are on the title; what the money is for.
Straight answers, fast. No real-estate security to offer, a loan that would sit third behind two existing mortgages, or money for personal or domestic purposes — those are not HomeSec loans, and we will tell you inside the first phone call rather than three weeks in.
Questions brokers ask about declined cash flow loans
Can HomeSec fund a deal after a cash flow lender has declined it?
The client was offered some of what they need. Is that a reason to come to you?
Does the client have to start repayments straight away?
Do I need financials, bank statements or a credit file to run the scenario?
How fast can it move?
Should the client apply to other lenders in the meantime?
What will you not fund?
Run the scenario online, or call 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time. If it looks close, call it through — the edge cases are usually the ones worth a conversation.