I need a loan to organise my finances

EAMON GALLAGHER

I am 44 and three years separated. I find myself around $30,000-plus in debt and playing catchup. I am in arrears on two office investment properties I am trying to salvage for some security down the track. There seems nothing available to help someone in my position. A loan would enable me to release immediate pressure and work my way back to a good financial position by year’s end.

I have a secure job ($82,000 a year) and rent from offices. I am still in joint loans on propertywith my ex-wife, which gives around $280,000 equity. A simple $20,000 debt consolidation loan would allow me to close all credit card and interest-free arrangements and easily pay off that loan over two or three years.

But I am unable to secure bank approval. There just doesn’t seem to be a product or service available to someone whose circumstances might be hopeless but whose outlook is not.

Gavan

Gavan, I am missing something here. Our banks have been swamped with cash charging into term deposits over the past few years, as we save more and spend less, and they are very keen to lend money to people with cash flow and security, in particular the security offered by good old-fashioned property. It looks to me as if you have two commercial properties, jointly owned with your ex-wife, and you have equity of $280,000 in these two properties. So if you sold them and paid out the loans on them, you and your ex-wife would have around $280,000 in cash.

You have a secure job, salary $82,000, plus rent from your commercial buildings. So I am struggling to get my mind around your situation – that you have $30,000 in personal debts. You may well have had divorce costs but, even then, I do not see how a loan of $20,000 will sort out the issue. I am unsure about where the interest-free loans come from and if there is any urgency to repay. Possibly these come from family or friends and, if so, I do understand why you would want to pay them back.

My feeling is there are complex things going on in your life. My advice is to come up with a very clear business plan. If I am confused, I am sure a lender will be as well.

Your starting point is a really clear summary of your situation.

A lender will really want: a recent valuation of the two commercial buildings; the agreement between you and your ex-wife on loans and property ownership; a concise summary of the $30,000 in personal debt – amounts and rates of interest; your budget, including any payments to your ex-wife.

On the face of it, you are in a really strong financial position. Presumably you also have superannuation, possibly a car and so on.

A real concern is the source of the personal debt. You are clearly very confident of a significant capacity to save. What will concern lenders is that you are in arrears on repayments on the two properties. If this is on your credit history, it is a bad look.

Go to the Veda Advantage website and its “my credit file” and complete the form to get a free copy. My concern is your credit history looks a bit sick and is the reason for your inability to refinance.

Please avoid “we’ll fix your credit file” type websites, as well as those offering to fix your debts. They generally charge high fees and get people into more trouble.

If you do need a hand, talk to a financial counsellor. The government’s MoneySmart website has plenty of details and on free-call 1800 007 007 you can make an appointment in your area. The service is free and a professional counsellor will have had plenty of experience in credit history issues.

I may be wrong, but I have no idea why a lender would not be very keen to lend you $20,000 based on the $280,000 in equity, a solid job and the ability to repay the loan in a couple of years. If I was a lender I’d jump at this – it is how they make money.

If your credit history is fine, I’d talk to a broker. It will be a simple issue for a good broker. But if it’s a problem, a counsellor is the solution. And, although you have been through a tough period, a solid personal business plan is the key to sorting a sensible refinancing package for your future.

PAUL’S VERDICT: CHECK OUT YOUR CREDIT HISTORY

If it’s fine, a good broker will help; if not, you may need a counsellor to sort it out

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