Are banks still lending at a 97% LVR for investment properties?

[LisaP]

Hey Lisa,

U need a good broker, just another part of the team u need to build around urself, u cant be an expert at all aspects involved in the journey so u need to hire the right people, BA, broker, PM, accountant, conveyancer etc

pointless and impossible to learn the ins and outs of the each aspect of the process.

sit down with a syd broker and work out a plan for the next 24 months, which lender for property b, which for property c, deposit from where, which mortgage insurer etc, what lVR for property d etc, as u said it is a vital part of the process, without access to the $$$ u can do nothing. You need to understand the plan but don't be involved in the sourcing of the $$$ part.

just curious did u do a pre-approval? if so when, strange u r running into these problems now, most of the issues should have been cleared upfront before u bought

this journey is going to be fun been a roller coaster for u already, excitement of purchase, then frustration, then anger and now the control freak side of personality is emerging!

enjoying this

LOL... I'm glad I could entertain!!!

You are right, I need to be able to sit down with an experienced mortgage broker and go through my plan with him/her outlining the strategy for the next 2 years. I'm not going to get anywhere if I can't access my money or they won't lend to me!!

While my current mortgage broker is well educated and professional, I don't think has had to deal with many clients with my investment strategy before, and thus may not be so well versed in the specific finance strategy required. Plus, from a customer feedback perspective, I'm not too pleased as two months ago I obtained pre-approval from CBA for a loan at 97% (which I had to suggest to him), and then he called me last week telling me CBA had changed their policy and they would no longer loan to me as an investor at 97%, only 90%. He then told me he would go away and do some calculations and see if he could get me a loan as an owner occupier with the Bank, and the next thing I hear, I recieve a congratulations email from one of his assistants telling me that I had received unconditional approval, with the approval amount, with no comment as to whether this was an investment or OO loan, what the new LMI cost was, what the LVR was, or why CBA had rejected my OO application!

While my journey has hit a little bump - and I'm slightly frustrated - I'm loving it all the same! Although, I see you've already noticed the control freak side of my personality coming out huh? lol I am having to wrestle with giving up control of needing to know every possible thing there is to know about property investing before I start. Learning to go with the flow a little bit more...

Having said that, do you or does anyone else reading this have any good recommendations for a Sydney based broker that understands the concept of buying multiple properties in a short period of time by manufacturing the equity and pulling it out via a LOC or top up (are these two concepts the same thing?).

Cheers
Lisa

 

[Rolf Latham]

work out a plan for the next 24 months, which lender for property b, which for property c, deposit from where, which mortgage insurer etc, what lVR for property d etc, as u said it is a vital part of the process, without access to the $$$ u can do nothing. You need to understand the plan but don't be involved in the sourcing of the $$$ part.

But be prepared for the whole strategy needing to be re written when lender Xs policy changes, and LMI provider B and C merge, and lender A's valuer argues with you about the leapfrong val

ta
rolf

 

[HiEquity]

Having said that, do you or does anyone else reading this have any good recommendations for a Sydney based broker that understands

I don't know whether he is based in Sydney or not (he is my broker but I've never actually met the man) but I'm very happy recommending the services of Rolf Latham as eminently suitable for this purpose.

Someone had to say it - he seems to know what he's talking about?

 

[LisaP]

I don't know whether he is based in Sydney or not (he is my broker but I've never actually met the man) but I'm very happy recommending the services of Rolf Latham as eminently suitable for this purpose.

Someone had to say it - he seems to know what he's talking about?

Thanks for the recommendation HiEquity.

What do you say? Are you up to the challenge Rolf? lol

 

[stevo_c]

Hi Lisa,

Your determination is great, the grilling questions you've been nailing the more experienced SS members with has shed some valuable insights. I am about to take the plunge and buy my first IP soon using the same strategy you have mentioned here. Any chance you can put up your spreadsheet you mentioned earlier here or in the SS spreadsheet collection here: http://www.somersoft.com/forums/showthread.php?t=26452

Cheers
Stevo

 

[LisaP]

Hi Lisa,

Your determination is great, the grilling questions you've been nailing the more experienced SS members with has shed some valuable insights. I am about to take the plunge and buy my first IP soon using the same strategy you have mentioned here. Any chance you can put up your spreadsheet you mentioned earlier here or in the SS spreadsheet collection here: http://www.somersoft.com/forums/showthread.php?t=26452

Cheers
Stevo

Hi Stevo,

Thanks for the kind words

I have tried uploading it, but it keeps coming back with an "invalid file" for some reason. It might be easier if you PM me you email address and I can email it to you.

If anyone else would like a copy let me know.

Cheers,
Lisa

 

[Intrinsic_Value]

Well you seemed to have done alot of homework.

I congratutle you.

The only 'suggestion' i can give is to take things slow.

If your logic is correct, you will have plenty of time to implement it given your age.

If your logic requires 'fine tuning' then often its best that you dont fire all your cannons at once.

A very good trading message:
'do more of that which works and less of that that doesnt'.
Since you dont know which works yet, you have to give time to evaluate.

 

[Gargamel]

Newbie question - what's a CRAA file?

Also great thread

 

[oracle]

Newbie question - what's a CRAA file?

Also great thread

CRAA - Credit Reference Association of Australia

I believe it's your credit rating file which lenders use to check how good you have been to pay back your debts in the past.

Cheers,
Oracle.

 

[Gargamel]

CRAA - Credit Reference Association of Australia

I believe it's your credit rating file which lenders use to check how good you have been to pay back your debts in the past.

Cheers,
Oracle.

Thanks. I originally suspected from the context whether it had something to do with % of debt underwritten by a LMI provider or similar.

 

[LisaP]

Well you seemed to have done alot of homework.

I congratutle you.

The only 'suggestion' i can give is to take things slow.

If your logic is correct, you will have plenty of time to implement it given your age.

If your logic requires 'fine tuning' then often its best that you dont fire all your cannons at once.

A very good trading message:
'do more of that which works and less of that that doesnt'.
Since you dont know which works yet, you have to give time to evaluate.

Thanks IV - yes, I have done my homework and will ensure that I mitigate for different scenarios (ie. interest rate changes, rent increases or decreases, capital growth or decline).

I believe my logic/strategy is correct (don't we all ?) but it remains to be seen which lenders end up 'coming to the party', so to speak. That in itself, will be an interesting learning experience.

In terms of age, I am starting later than I would have liked (I'm 31, and should have got this underway in my 20s), but as I said in another post, this wayward path of life has allowed me to do a PhD on the topic, which I'm grateful for.

I'm also grateful that I'm starting off with the right strategy. Before I understood this strategy, I nearly bought a 1 bedroom unit in the "blue chip" suburb of Kingsford. This would have left me with all my money tied up in one property, having to pay a $300 p/w shortfall, and reliant on the next wave of capital growth to grow my equity. Given the market in Sydney is cooling at the moment, I may have been waiting a while; however, even if I was able to withdraw any equity, the banks would not have lent me any more money because too much of my income would have been going towards my first IP. While I believe it's good to have a number of blue chip properties in the portfolio, this will come later down the track.

Yes, I believe any strategy will need fine tuning along the way, but at the end of the day it all comes down to the numbers - and the numbers are telling me this strategy works. And hey, if like BT said, I end up with 9 properties in two years instead of 15, well, I'll be grateful for that as well.

 

[alexlee]

LisaP, I'm a little confused. Is this property you're currently applying for your first or second property? Or do you have more?

 

[LisaP]

LisaP, I'm a little confused. Is this property you're currently applying for your first or second property? Or do you have more?

Hi Alexlee,

I've just exchanged on my first property; in my previous post, I was explaining that I nearly bought a property in a blue chip area. So, I have one IP in total (or will do when it settles in six weeks time), and thus will be able to apply for the FHOG.

Cheers
Lisa

 

[LisaP]

My first challenge....

Well I heard back from my mortgage broker today, and apparently CBA won't lend to me as an owner-occupier at a 97% LVR because my current income is too low!!

I admit that my income is a little different from most, because my income consists of a three year tax free scholarship which is paid to me by the Australian government. However, the scholarship plus additional work that I do means I earn about $40K a year (approx $50K gross). For all your experienced mortgage brokers and investors out there, can you confirm that a single person, with no dependents, claiming no rent, no credit card debt, (although I do pay interest on a margin loan of about $230 a month), and claiming the FHOG - CAN NOT GET A LOAN FOR $245,000!!!

So, as a result I have had to accept CBA's investment loan, which means my LVR will be at 90% not 97%.

OK, I have been thinking about my above dilemma - and damn it if I'm going to pay $15K more for my deposit because CBA won't lend to me at 97% for a $252K O/O loan !!!

While I have already received unconditional approval from CBA for a lend at 90% at $230K, is there anyway that during the six week settlement that I can either convince CBA to lend to me at 97% or if that does not work, approach another lender to see if they will lend to me at 97%?

CBA would have on record my consistent savings history, stretching back five years, where every month I put away an amount almost equal to the interest I would need to pay on the loan at a 97% lend, bar $240. I also have a manged fund account, which is costing me about $230 a month in interest. If I was to sell that, would they perhaps then lend to me at the 97%?

Or, if I am unable to obtain a loan at 97%, and need to put in the extra $15K, is there any way to pull out the $15K through refinancing once the house is settled?

Thanks
Lisa

 

[LisaP]

For those wondering, I'm currently exploring a number of options with regards to my LVR dilemma. They are:

a) Sell my manged fund, reducing costs by $230 a month (this is the interest I'm paying on the manged fund), which may persuade CBA to lend to me as an O/O at 97% LVR (I would check this out first before doing it);

b) Do not sell the managed fund, and look to see if I can get unconditional approval from another lender for 97% within the 6 week settlement period (if this is possible);

c) Bypass my mortgage broker and go directly to CBA myself and see if I can convince them to to lend to me as an O/O at 97%;

d) Accept the 90% lend with CBA, and factor in a reduction to my available equity of $15K.

So what do you think guys? Should I pursue option a, b, c or d?

 

[Crane]

97% Loan on trust

Hi,
Are there any lenders that lend 97% for a loan through a trust?
Thanks

 

[Rolf Latham]

RAMS

Lots of little niggly conditions though

ta
rolf

 

[BrownDog]

It all sounds a bit too complex to me - I don't see how you could get to 15 in 2 years - but that's only my logic telling me that.

I don't think my lender would revalue a property within 6 months of purchase - so to me, that would be an instant barrier to 15 properties within 2 years if true - but then again, I could be way off the mark here as I'm only looking to refinance IP1 in a couple of months.

On top of that, I would be amazed if you could get the finance for 15 within 2 years at 95%+ LVR - but again, that's only logic speaking... not experience

 

[tess85]

LisaP - great thread - I look forward to following your journey with interest. I applaud your drive in aiming high.

Re: a sydney based MB - suggest you have a chat with Jane Slack-Smith of Investors choice - posts on SS as Buzz. She has been our MB for all of our purchases, and is a property investor herself.

 

[LisaP]

LisaP - great thread - I look forward to following your journey with interest. I applaud your drive in aiming high.

Re: a sydney based MB - suggest you have a chat with Jane Slack-Smith of Investors choice - posts on SS as Buzz. She has been our MB for all of our purchases, and is a property investor herself.

Thanks for the recommendation Tess.