Borrowing capacity: broker versus bank?

We're trying to get our ducks in a row to purchase our first IP. I've had some discussions with a mortgage broker and he's recommended we go with the CBA and that our borrowing capacity is around 350K. Thinking that sounded a bit low, I contacted a different bank directly (NAB) and, off the same set of numbers, they've suggested around 420K would be fine and probably up to 450K. The broker indicated that our 4 dependants were chewing into our capacity significantly whereas I asked NAB what impact our dependants had on their calculations. They responded only around 20-30K total.

I'd be comfortable servicing a loan of around 450K so am inclined to believe NAB over the CBA; but from your experience, to what extent have your dependants impacted on your borrowing capacity? It also seems that someone is having a lend of me. But is it CBA, NAB or the broker?

Regards, Gary
 
It's hard to say from the brokers point of view without fully understanding the figures. In terms of serviceability, most brokers simply use the various calculators provided by lenders and getting results for multiple lenders quickly isn't difficult. The results can differ wildly from one lender to another and generally my expectation would be that NAB would work out better than the CBA.

On the other hand, the NAB appears to have given you advice without properly verifying anything. What they've told you is potentially very inaccurate. Most lenders have a habit of getting you interested first, then working out the details later. 4 dependents will also have a much bigger impact on borrowing capacity than $20k-$30k with any lender (as opposed to 0 dependents).

You might want to ask the broker why they recommend the CBA over NAB. Both have their pros and cons and almost all brokers can work with both. There could be something in your circumstances which might disqualify you from the NAB, or there could be something about the CBA that works better for your circumstances.
 
From personal experience, I found that a branch manager of a bank was able to approve a higher figure by putting his own signature on it.

For yourself though, you're comparing 2 different banks... different banks often have different serviceability criteria and that's the point/beauty of a broker. Good brokers are familiar with each of their serviceability models and can point you in the right direction straight up, saving you from visiting and talking to them all.
 
Thanks for the input so far.

Peter, the broker suggested CBA had a slightly better comparative rate than NAB for the products being considered.

I've since contacted the CBA to run some theoretical numbers and they've come back with a capacity of around 450K so the bottleneck seems to be the broker.

Dave, in this case the broker seems to be suggesting a lower capacity than that suggested by speaking to the banks directly. I'm not sure if the broker is factoring in something I'm not familiar with.

Regards, Gary
 
either you are missing something, or the broker made an error - I would go beack to the broker,tell them your concerns and get them to rerun the figures.

Dependants (in my experience) make a significant difference - We seem to be able to borrow about 30k less with EACH additional extra.
 
Maybe the MB isnt factoring in the CBA propack discounts in his equations.

Although that being said I'd think that NAB presently would lend more than CBA would

Might be a thought to break the loan down into something a bit more than comparison rates.

I.e. interest p.a., fees - annual and monthly, offsets, rate locks, lmi costs
Then get into actual product flexability with offset, interest only, redraw etc.

Being how CBA is roughly about .20-.40 pts higher than nab... they're not on our top choice of lenders.

They do have a tolerance for defaults though which NAB doesnt so dont know if that comes into it.
 
Westpac vs. Westpac vs. Westpac. :confused:


Oh what fun, wbc 3rd party can turn something that services well into a declined real quick with any number of silly PC excuses

With CBA and NAB at least you get consistent application of policy, and not the "its wednesday " declined, bad luck should have sent that to be processed Friday treatment.

ta
rolf

ta
rolf
 
Top