Changes / tightening on servicing for investors

[Peter_Tersteeg]

What if I told you they are one of my lenders...I am now maxed out with them...but have $1.4m with 4 securities......

Did a couple of revals...they were very realistic on vals unlike my friends at CBA and have done 3 deals with 90% lends. I will agree once you go over a $1m with them....they scrutinise more heavily. Much better to deal with than NAB, ANZ or CBA.

It's great that you're in a position to take advantage of their competitive rates for that amount of money. When you maxed out with Suncorp, were you still able to borrow more from other lenders? What happens now if you need to access equity and most of your equity is in one of those properties already held by Suncorp?

 

[Jess Peletier]

That's a prime example of why chasing low rates can be very expensive. 3 IP's at 90% means to access equity in any of them you'll need to refi to another lender for each, and pay LMI all over again.

 

[sash]

Actually I want low rates but not the end game...otherwise I would not have got to 24+ properties...

Here is the run down on my 4 properties.just checked..other..looks only 1 LMI deal...as I did a deal on the other on (see explanation below)..

1. Property 1 - refinance at 80% from CUA.

2. Property 2 - refinance from 80% from CUA

3. Property 3 - Construction loan put only 10% down and no LMI as I put remaining 10% in term deposit till val could be done. Now refinanced with WBC

4. Property 4 - Construction loan 93% LMI loan...revalued and 89k pulled out after 14 months

5. Property 5 - Construction loan 93% LMI loan...revalued and 69k pulled out after 15 months

That's a prime example of why chasing low rates can be very expensive. 3 IP's at 90% means to access equity in any of them you'll need to refi to another lender for each, and pay LMI all over again.

 

[Jess Peletier]

Nice work!

It was more of an example to the new investors who almost invariably are rate focused and want to go for the cheapies without thinking of the longer term implications - for them, being able to access equity is vital and making that mistake early can be a real hindrance to progress. Maybe not so much when you've got 24

 

[Brady]

CBA changes coming 18/6

TBA

 

[hugh72]

CBA changes coming 18/6

TBA

Hope they don't change their IO renewal policy from tick and flick, are we heading to a point where we cannot differentiate between the big 4 for investors except for their logos?

 

[remingbi]

CBA changes coming 18/6

TBA

Damn. Any whispers whats on the table

 

[Brady]

Damn. Any whispers whats on the table

Tried digging, credit team doesn't even know yet.

It's only being release next week.

From what I've been told will be similar to other banks, clamping down little bit on investors.

My bet would be changes to servicing OFI @ actual. Would be guessing they would now be based on an assessment rate. This doesn't affect me, most of my clients deal just with CBA, and really makes sense why apply assessment to your own and not OFI (for my personal banking I make sure I can afford on higher assessment rate for risk mitigation).

Would also think 90% LVR for investors, again no big deal for me and makes sense.

I hope they don't tweak the assessment rate for new borrowings and still use 7.25% less discount, would be dissapointing to see a flat 7.25% but could happen. This would affect me.

 

[remingbi]

Tried digging, credit team doesn't even know yet.

It's only being release next week.

From what I've been told will be similar to other banks, clamping down little bit on investors.

My bet would be changes to servicing OFI @ actual. Would be guessing they would now be based on an assessment rate. This doesn't affect me, most of my clients deal just with CBA, and really makes sense why apply assessment to your own and not OFI (for my personal banking I make sure I can afford on higher assessment rate for risk mitigation).

Would also think 90% LVR for investors, again no big deal for me and makes sense.

I hope they don't tweak the assessment rate for new borrowings and still use 7.25% less discount, would be dissapointing to see a flat 7.25% but could happen. This would affect me.

I hope they don't tweak the 7.25 discounted rate either
Do u think cba would give a grace period or is it immediate?
thanks

 

[jerrybee]

I hope they don't tweak the 7.25 discounted rate either
Do u think cba would give a grace period or is it immediate?
thanks

Can be both. But if you already have an application in the pipeline they will honour it. Point being - get moving!

 

[Rixter]

I think now this thread is up to 400 odd posts some people are beginning to realise that property investing is Not about property, rather finance.

 

[Azazel]

I think now this thread is up to 400 odd posts some people are beginning to realise that property investing is Not about property, rather finance.

If we're going by post counts, it's all about Elizabeth apparently

 

[hugh72]

When all the OTP highrise CBD monstrosities around the country are completed in 12 months with these new lending policies how many people are going to get burnt?

 

[Rolf Latham]

When all the OTP highrise CBD monstrosities around the country are completed in 12 months with these new lending policies how many people are going to get burnt?

collateral damage

Unintended consequences....................from a poorly targetted approach, but its simpler to do its this way

85 % of Australian borrowerswont be ouch by these changes in the short term.

this too will pass, but for quite a few its not hurting just in 12 mths time, but indeed now.

ta

rolf

 

[Rolf Latham]

I hope they don't tweak the assessment rate for new borrowings and still use 7.25% less discount, would be dissapointing to see a flat 7.25%

decent chateu le cardboard says 7.25 across new and existing and OFI it will be .............or equivalent ( as in the case of WBC eg that use other loading factors to come up with a similar result)



ta
rolf

 

[hugh72]

So whats left to differentiate the big 4?

 

[Rolf Latham]

So whats left to differentiate the big 4?

there are some policy and vals methodology differences

where the real hurt will come middle term is the smaller lenders that had niche being excluded, because they dont have the other means of income the larger lenders do.

I guess the ACCC isnt going to sanction APRA : )


ta
rolf

 

[euro73]

This will continue to evolve as APRA monitors the impact of the changes. The I/O heavy books didn't happen overnight and the rebalancing of those books towards P&I wont happen overnight either....

As I have said before and will say again - get to know names like Adelaide Bank and Firstmac if your capacity with the Big 4 is now approaching exhaustion. Both offer you the markets best servicing calcs, both offer a choice of either Genworth or QBE for LMI (should you require it) and both have very well balanced books so will have an appetite for some I/O debt for a while. Both are available via those retail brand names, but both also provide funding to a number of mortgage managers. Peter has already posted about mortgage managers being a new opportunity for investors. These will be two of the primary funders for those MM's

Both though, are quite conservative with cash out. They allow it, but there will be some hoops to jump through. So be smart. For those of you with equity available now, my strong, strong recommendation would be that you call your broker and pull it out now, while it's still readily available. Later, when you need it - it will already be set, and then you can go to ABL or FM ( if capacity is exhausted elsewhere) to set your next INV deals. Both will allow up to $2Mil exposure. So between the 2 of them there's $4million of potential lending available, and it can be spread across Genworth and QBE.

 

[Rolf Latham]

\ Adelaide Bank and Firstmac if your capacity with the Big 4 is now approaching exhaustion. Both offer you the markets best servicing calcs, both offer a choice of either Genworth or QBE for LMI (should you require it)

ABL will last approx 2 to 3 weeks t best so get those loans in, bit of a personal pity thing, they were one of the first I wrote loans for back in the late 90s

Genworth and QBE are pretty much hopeless ( ie decline for a first response) as direct insurers for anyone with a decent portfolio that makes too much rent.


ta

rolf

 

[remingbi]

so once everyone has maxed out the banks and adelaide bk and firstmac, is there an option of using other non deposit taking financial institutions such as for e.g.
1. liberty financial
2. la tribe financial
3. resi home loans
4. pepper home loans
5. wide bay australia

there rates r likely more expensive, but how do they rate on a serviceability of ofi debt, and their own debt?

thanks