Cash out,

[investor2009]

Hi,

just wondering what the usual limit (if there IS one at the moment) is for cash out per property with CBA up to 80% LVR. And is this limit (again, if there IS one) per property, or as a whole amount, no matter how many you have with that lender.

And is Wespac the same, or similar?

I've never run into any trouble with smaller amounts of $30k at a time or so, before but am wondering about larger amounts and I know things often do change.

Thank you.

 

[Rolf Latham]

Hi

Assuming full doc and preferably not NTB client.

CBA are ok with co to xyz at 80 % with a well explained reason and plan

have had 1 mill plus in the past

WBC is a bit more weasely, and while there is no distinct policy per se, they will make u work for it a little more than CBA.

Still better than some of the others

ta
rolf

 

[investor2009]

Thanks Rolf.

I am full doc, but in going to 80% will service-ability come into play, or is this only for going over 80%?

Will an explanation of 'renovation to existing properties' be good enough for CBA you think?

Thank you.

 

[Rolf Latham]

need to be able to service the loans usually, though if you are going retail/ branch then this used to be less of an issue.

With renos, you can run into the issue that they will want to do the loan on prgress payment basis of fixed term contracts

ta

rolf

 

[alexlee]

I think the tactic here is: tell the banks what they want to hear.

 

[Peter_Tersteeg]

Lenders will always want to know the purpose of cash out. Somewhere between $50k and $100k lenders will want evidence of this purpose. As a guide:

* Funds for reno - provide a contract for the works with progress payments.
* Funds to complete another property purchase - show them a contract of sale for the next purchase.
* Funds for shares - letter from a financial planner.

There are plenty ways around each of these, but it does depend on the circumstances. As Alexlee suggested, it helps if you understand what they want to hear, so you can frame your (honest) proposal in the best light.

I expect lenders will be requiring income and serviceability verification more going forward as the new laws dictate they must be able to demonstrate that the loan is 'not unsuitable'. Thus they need to be able to prove that an increase won't cause financial hardship.

As time goes on, lenders may start to model past behaviour if you have your accounts with them to satisfy that you can afford the increase, but for the moment a lot of lenders are nervous about this and are doing full checks for even small amounts.

 

[alexlee]

* Funds for shares - letter from a financial planner.

PT Bear, where the investor does his own research and doesn't use a FP, how would this work?

 

[Token Funder]

PT Bear, where the investor does his own research and doesn't use a FP, how would this work?

As I had to explain to a disgruntled borrower recently who didn't like our 'No Cash For You" response...it's no good telling us you plan to invest in shares if you (a) you currently don't own ANY and (b) don't have a trading account.

 

[alexlee]

As I had to explain to a disgruntled borrower recently who didn't like our 'No Cash For You" response...it's no good telling us you plan to invest in shares if you (a) you currently don't own ANY and (b) don't have a trading account.

That makes sense. What I mean is, instead of a FP letter, can the borrower show say a trading statement or current shareholdings?

 

[Peter_Tersteeg]

I had client a while ago who wanted $150k for shares. We showed a trading account history over 2 years where he'd turned $20k of his own money into $30k. No problems at all.

Another recent client wanted $100k for options trading and has negligible experience. We got a letter from his stock broker at Bell Potter and the bank didn't blink (mind you I did). Most stock brokers doen't put together financial plans. Their role is usually to make recomendations (if you want them) and manage transactions effectively.

Also keep in mind that a financial planner usually doesn't recommend direct share investments. What they can do though (if direct shares is your method of choice), is review your strategy, review your risk profile and make recommendations around ways to supliment your strategy, mitigate your risks and optimise your structuring.

At that point the planner can legitimately write a letter saying you've got a plan in place for the money and most lenders will release it to you.

 

[Rolf Latham]

Mama needs to write u a letter: )

We have had cirumstances of clients who are qualified planners, but not currently working directly in the industry having to ask a fish and chip accountant for a letter to say the client would use the funds for shares

I understand that the MLA issues have to be covered...........but that was funny

ta
rolf

 

[mortgageman]

Also, there are still a couple of lenders who don't require proof of use for cash out if you would prefer not to go through the rigmarole of providing quotes for reno's, purchase contracts etc.

Regards,

Cameron Perry

 

[investor2009]

Thanks Mortgageman.

Very good to hear.

 

[Perth Investor]

Just go to Citibank or AMP, no cashout restrictions and no questions asked below $1M at 90% and 85% respectively.

And Citibank is at 7.08%, and AMP is 6.82% I yr reverting to 7.16%, so both good banks.