A Brisbane couple came to us looking to renovate. Two years of design meetings later, their neighbour offered them the house next door. Here's how the lending advice followed the situation, not the original brief.
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A real client story. Names and identifying details have been changed.
Most of the lending advice we provide doesn't follow a straight line. Clients arrive with one plan, life intervenes, and the plan becomes a different plan. What matters is that the advice keeps pace.
A Brisbane couple came to us recently through one of our trusted financial planning partners. We'll call them Tom and Emma. They had a young daughter, a home in an inner suburb they loved, and a frustrating two-year history of trying to renovate.
The brief looked tidy on paper. It turned into something else.
Tom and Emma bought their home during Covid, planning to renovate. Life kept pushing the timeline back. By the time they came to us, they had spent the better part of two years working with builders on a design and a budget they could live with.
Brisbane is reportedly the most expensive city to build in Australia right now. Builder reliability is the biggest pain point we hear from clients in that market. Fixed-price contracts that don't stay fixed. Scope that creeps back up no matter how much you cut. Timelines that drift past comfort.
They had two scenarios on the table. A larger reno that doubled the footprint at a $900k target (already drifting back to $1.2M with builders). A smaller single-storey extension at a $600 to $700k budget for an extra bedroom, study, and second bathroom.
Their previous broker had exited the industry suddenly. Their planner introduced them to us. They weren't asking for a pre-approval. A fixed-rate portion of their existing loan ran through to January 2027, so building before then was off the table. They were asking for clarity.
What they needed was permission to have realistic conversations with builders. They wanted to know, with the numbers properly modelled and rate-rises layered in, what they could afford without putting the rest of their financial picture at risk.
We ran their borrowing capacity across a panel of lenders, modelled both build budgets, and stress-tested for rate movements of up to a full percentage point above current rates. We sized the construction loan structure, considered staged drawdowns, and walked through how their existing fixed-rate portion would interact with a new construction facility on top.
The numbers were strong. Tom is a senior in-house lawyer at a large corporate. His base salary sits in the mid-$200k range with a variable bonus that has swung meaningfully from year to year. Emma works part-time in marketing for a media business, pulling around $88k pro-rata. They were at roughly 50% LVR with $150k in liquid investments and a $30k cash buffer. They had real flexibility.
We were ready to walk them through the construction strategy.
Then the phone rang.
The house next door came up. Not on the market. Their neighbour, knowing they had been wrestling with the question for years, approached privately and offered the property off-market for $2.15M.
The maths looked different.
For two years they had been trying to renovate their way into a bigger, better-functioning home. Builders, drawings, fixed-price contracts, all the risk that goes with that. The neighbour's property was already standing. Bigger footprint. Same street. Same neighbours. Same school catchment. No build risk. No moving out for a year while works progressed.
The new question was: can we do this, and what does the financing look like?
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We rebuilt the assessment from scratch. The brief had changed, so the analysis had to change with it.
We modelled four scenarios across two purchase prices and three sale-price assumptions for their existing home. The variables that mattered were the ones the clients couldn't see from the outside.
Where does the best interest rate kick in? At 70% LVR, several lenders open their best rate tier. Above that, the rate steps up slightly. Worth touching their liquid investments to get there? Maybe, maybe not. We showed them both.
What happens if their existing home sells lower than expected? At what point does it get tight enough for bridging finance to become a serious consideration, and what would that cost in cash terms? (Try the Bridging Finance Calculator)
The settlement structure also moved. The neighbour had bridging in place and was comfortable with an extended settlement. That changed the timing pressure entirely. We didn't need to engineer a simultaneous settlement to make it work.
All four scenarios serviced comfortably across the five lenders we assessed. Maximum borrowing capacity ranged from $1.74M to $1.79M, well above the highest required loan amount. Debt-to-income ratios sat between 3.98x and 4.29x, all well inside the 6x threshold most lenders use as an upper limit.
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We also walked through the edges. The modest break cost on their existing fixed portion (small balance, current variable rates above the fixed rate, so the break cost stays minimal). The lender-by-lender treatment of bonus income if either of them ever changed roles. The offset account strategy once their sale proceeds arrived.
A loan of $1.62M against a $2.15M purchase. 75.35% LVR, comfortably under the 80% threshold, so no lenders mortgage insurance. ING's Orange Advantage product at 5.99% variable, the sharpest rate available on the day. Two 100% offset accounts so their sale proceeds could go straight to work reducing the interest the moment they landed.
A monthly surplus of around $813 after the proposed repayment, with comfortable headroom against full capacity.
Tom and Emma now have a clear path. Sell, settle, move next door. No build risk. No two more years of design meetings. The home they were trying to create through a renovation was already standing twenty metres away.
The decision to recommend ING took a few hours. The work behind it took weeks, and most of it was on a question that wasn't on the table when we first met them.
That's what we try to do at Alcove.
We work alongside our clients' other trusted advisers (planners, accountants, buyers' agents) because the lending decision is rarely separate from the rest of someone's financial picture. We don't write one proposal and call the job done. We model conservatively, show the upside and the edges, and stay close enough to the situation that when something changes, the advice changes with it.
Sometimes the best strategy is the one you came in for. Sometimes it's the one your neighbour offers you halfway through.
Either way, we want clients walking into the next conversation knowing what they can afford, what they shouldn't stretch for, and why. Whether that conversation is with their builder, their agent, their accountant, or their vendor.
That's the work.
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