Unusual Income
June 3, 2026Client Background
The clients were a couple who had previously operated a company that had entered liquidation. To meet the costs of the liquidation process, they had taken out a caveat loan secured against their owner-occupied property. They were now employed on a PAYG basis and had stabilised their financial position but were carrying a significant and complex mix of debt obligations that needed to be resolved. The clients were subject to a Part 10 Personal Insolvency Agreement, which restricted their ability to access standard lending. Combined with an outstanding ATO liability, an existing mortgage and an elevated-rate caveat loan, they required a specialist solution that mainstream lenders were unable to provide.
Client Objectives
The clients sought to refinance their owner-occupied property to pay out all outstanding obligations in full. The total debt position consisted of an existing mortgage of $302,000, a Part 10 debt agreement of $165,000, an ATO debt of $130,000 and a caveat loan of $44,000, bringing the total to $641,000.
The Solution
Fundsnational completed a thorough review of the clients’ current income, property value, debt obligations and repayment capacity to understand the complete picture before approaching any lender. A long-term exit strategy was then prepared demonstrating how the loan would be serviced and repaid, giving lenders confidence in the proposal’s viability. Fundsnational identified a specialist lender with appetite for complex credit scenarios, including borrowers with a prior insolvency history, and presented the full application package. A refinance of $600,000 was approved, enabling all four debt obligations to be cleared in full and consolidating everything into a single principal and interest loan.
Exit Strategy
A key part of the approval was demonstrating a clear and credible exit strategy. The clients have no intention of retiring in the near term and plan to continue working, providing a stable income base to service the loan. The security property is currently valued at $900,000. Under the proposed principal and interest repayments, the loan balance is projected to reduce to approximately $495,000, representing a material reduction from the original loan amount of $600,000. Based on a conservative long-term capital growth assumption of 5% per annum, the property is estimated to increase in value to approximately $1,600,000 by retirement, resulting in an estimated equity position of around $1,100,000. At or prior to retirement, the clients intend to downsize their principal residence, which would comfortably allow for full repayment of the outstanding loan balance and the purchase of a lower-value retirement property without reliance on post-retirement employment income.
Outcome
All four debt obligations totalling $641,000 were cleared in full. The clients moved from a complex multi-creditor position with an active Part 10 agreement and ATO liability to a single
consolidated loan with a clear repayment plan and a strong long-term equity position. A result that standard lenders were unable to deliver.