The World Is Against Me

Scott,

I’m a recently divorced dad with a legal bill of $40k (lawyers are dogs!) and a credit card debt of $20k. I work two part-time jobs which together earn the equivalent of a full-time job, about $75k gross a year. The divorce settlement sees me keeping the property, valued at $1.1 million with a loan of $320k remaining. My mortgage broker is working on getting a loan for $380k but has come back and said my second job won’t be counted so I have to take out a higher rate investment loan. What can I do about these pricks?

Wally

Hi Wally,

Here’s why you’re not getting any love from the banks: you’re bringing in $4,800 a month ($75k p.a), and your monthly repayments on $380,000 are around $2,100 a month, or about 45 per cent of your monthly income. Out of what’s left over you’ve got to put food on the table and pay child support. Even if you had one full-time job most banks would charge you a higher interest rate, but given you have two part-time gigs, it makes your income less reliable. The bottom line is that you’re not in a strong negotiation position.

You have three choices: one, take the higher interest rate loan and chew really hard (though that’s not what I would do). Two, get a higher paying full-time job so you’re not handing nearly half your wage over to a banker. Or three, downsize, pay off your debts, buy a cheaper house, and spend time with your kid.

Scott