Commbank Question

[neK]

Hi all,

Hoping if someone can confirm if the following is true.

Broker is recommending me to go to NAB (lower rate), but I'm thinking of moving to CBA.

I mentioned to the broker that I would like to do the following (not necessarily right now, but maybe in a few months time).

For example, say my PPR was last valued at $1m. I have currently have a loan of $800k (80% LVR). Now its worth $1.2m. I want to do an equity release and obtain and equity loan of $160k. The equity loan is secured against the property.

Broker said this is not possible because CBA will NOT allow me to obtain a loan greater than $50k without a purpose. They will however allow it for a property purchase, but they must see a contract. However this is not possible given its about getting the equity ready so that when a property comes its, one is ready to move quickly. That said, he did say CBA will approve the loan, but not allow me to draw down on it until a contract is sighted and my financials at the time are re-assessed (which in my opinion is no different to pre-approval and really not worth didly squat).

St George did this for me without any questions, they gladly had the equity ready and i could draw down at any time.

I want to confirm is this true about CBA or is this broker really trying to push me towards NAB?

 

[Peter_Tersteeg]

If the LVR with the equity release considered is 80% or lower, then both lenders would allow this scenario. You'd get into trouble with both lenders above 80% LVR and would have to provide a contract to prove the use of the funds.

In my opinion NAB is the easier and usually cheaper lender of the two, but I'd take either of them over St George.

 

[Brady]

CBA will do it easy <80% LVR

 

[Mick C]

^ Agree with Brady...CBA no issues with cash out. Our office do it EVERYDAY ranging from your small $20,000 to massive $800,000 + with the Big 4 ( including CBA and NAB)

When a broker tells you 50k max with CBA this tells me 2 things

1. Probably not accredited with CBA or dont have a lot of dealing with CBA

2. Doesn't like to push outside the zone or " under writing guild lines" as CBA dont actually have a "set written policy " for cash out ..ie Bankwest in black & white it states $100,000 max or evidence required etc... NAB no limit....with CBA it's no policy so it's based on the deal at hand.

----

But there could be an underlining reason for her/him too recommended NAB, a valid reason by all means....but an excuse like " 50k max with CBA " - i call " ALL IN"

 

[Mick C]

Sounds like your more comfortable with CBA as well....

 

[zimby]

Done It with CBA before, even used a Desktop Val, Given the amount was just short of 50k and at LVR 80%

 

[Brady]

I think it's #1 mick!

I'm also going to 'call'

Have a cash out settling for a client this week for $496k (80%) refinance of OFI loan of $6k

 

[Aaron_C]

CBA cash out under 80% is a walk in the park. Same with NAB and pretty much all majors. Maybe the broker knows something else we don't?

 

[Corey Batt]

Agreed, CBA and NAB are some of my favourites for cashouts within these parameters.

 

[Cards]

Good question! I'm about to apply for a LOC at 90% LTV with CBA.
(Dep for another IP)

From what i understand, LMI is triggered at 88% LTV with CBA.

Has anyone done this at 90% LVR lately?

If so,
As CBA does not have set policy, did you need a contract in place before they released the funds - as suggested by others? or will a Stat Dec be sufficient?

 

[Rolf Latham]

Good question! I'm about to apply for a LOC at 90% LTV with CBA.
(Dep for another IP)

From what i understand, LMI is triggered at 88% LTV with CBA.

Has anyone done this at 90% LVR lately?

If so,
As CBA does not have set policy, did you need a contract in place before they released the funds - as suggested by others? or will a Stat Dec be sufficient?

Above 80 % lvr the policy for cash out is quite set

LVR with LMI is 80 unless you are medico or allied, can even do IP refi to 95 % inc lmi for existing, BUT needs to be directly related to a current purchase OR non struct renos

End servicing needs to be met

This is one area that CBA plays really well in.

ta
rolf

 

[neK]

Thanks for the confirmation guys!

 

[Rolf Latham]

As a parallel question, what is your serviceability like ?

ta
rolf

 

[neK]

As a parallel question, what is your serviceability like ?

ta
rolf

Me?

I'd like to think my serviceability is rather good.

While it was Single income + 2 dependents, NAB was willing to loan approx $600-$800k (everyone else was pretty much nil)

Then when it went to dual income + 1 dependent, CBA was willing to lend $1.3m to 1.5m.

I'm trying to figure out what the optimal way with my lending.

Currently with SUN and STG. If I was going to refinance, I am thinking that it would be best have SUN/CBA or STG/CBA. Because given my serviceability position, these guys would happily give me an equity release up to 80% LVR (at this particular point in time) and that would be sufficient to meet 20% Deposit + funding for renovation on the next property purchase.

However I feel that if i go with NAB right now, I would still get the same amount of equity release (because the property values aren't going to be magically higher with NAB). However my position become single income + 3 dependents, I don't want to be stuck in a situation where no lender will give me funding.

If me and my wife weren't planning to have more kids in the near future, then i don't think it would make a big difference in the order of lenders, but we are

Is my thought process correct here? Or am I way off the mark?

 

[Rolf Latham]

Me?

I'd like to think my serviceability is rather good.

While it was Single income + 2 dependents, NAB was willing to loan approx $600-$800k (everyone else was pretty much nil)

Then when it went to dual income + 1 dependent, CBA was willing to lend $1.3m to 1.5m.

I'm trying to figure out what the optimal way with my lending.

Currently with SUN and STG. If I was going to refinance, I am thinking that it would be best have SUN/CBA or STG/CBA. Because given my serviceability position, these guys would happily give me an equity release up to 80% LVR (at this particular point in time) and that would be sufficient to meet 20% Deposit + funding for renovation on the next property purchase.

However I feel that if i go with NAB right now, I would still get the same amount of equity release (because the property values are going to be magically higher with NAB). However my position become single income + 3 dependents, I don't want to be stuck in a situation where no lender will give me funding.

If me and my wife weren't planning to have more kids in the near future, then i don't think it would make a big difference in the order of lenders, but we are

Is my thought process correct here? Or am I way off the mark?

Its pretty much in the right direction.

Im expecting your broker doesnt have the fine detail you have provided above ? Otherwise the CBA to NAB recommendation wouldnt be made.

The serviceability gap in the future will be wide enough to drive a truck through.

if you service for cba now, and dont need to access equity from that prop unit, u are dual income again, then thats prob better than using NAB for the equity draw, and leaving NAB et al to when you need to make a solo income purchase.

There are other serviceability lenders that fall into the NAB area like Macq bank, ME, AMP, Adelaide bank................



ta
rolf

 

[neK]

Its pretty much in the right direction.

Im expecting your broker doesnt have the fine detail you have provided above ? Otherwise the CBA to NAB recommendation wouldnt be made.

The serviceability gap in the future will be wide enough to drive a truck through.

if you service for cba now, and dont need to access equity from that prop unit, u are dual income again, then thats prob better than using NAB for the equity draw, and leaving NAB et al to when you need to make a solo income purchase.

There are other serviceability lenders that fall into the NAB area like Macq bank, ME, AMP, Adelaide bank................



ta
rolf

Actually I outlined all of this to the broker. I mentioned that I was concerned about future serviceability and that I have a preference to stay with the major banks. I kept mentioning CBA over and over again during our conversation (and as Mick C picked up, i do have a preference for CBA over NAB).

Unfortunately, he kept leaning towards NAB and then mentioned using Citi, Macquarie, AMP etc to address my concern of future serviceability.

When he mentioned CBA and STG required additional evidence of what I was planning to use funds for on equity release even though LVR was below 80%, that triggered some alarms to me, especially the way he said "then NAB is the way to go if that's what you're after".

 

[Aaron_C]

I think the main reason is CBA still has a reputation of having a difficult cash out policy because if you ask any BDM they will say 'it's an open policy' - which as a broker doesn't generate that much confidence because you don't have a number to measure against.

Having said that, if you've dealt with them many times you'll find that below 80% a cash out is easy. The main issue with CBA is not the cash out policy but the documentation required with transaction accounts, OFI loan statements etc whereas NAB is relatively straightforward in this department.

 

[Rolf Latham]

then mentioned using Citi, Macquarie, AMP etc to address my concern of future serviceability.

Citi.............

lender of close to last resort or for specific needs

If your broker were one of my mentorees............... keep it simple and dont blast your client with 50 options, you arent doing them any favours

ta
rolf

 

[Mick C]

Citi.............

lender of close to last resort or for specific needs

If your broker were one of my mentorees............... keep it simple and dont blast your client with 50 options, you arent doing them any favours

ta
rolf

^ Lol citibank servicing is terrible...living expense increase as your pay goes up ....

A bit out of the box, but you can ask your broker for a copy of the CBA serviceability result based on your file so you can see for yourself where your file stands with CBA.

But either way CBA servicing will be more conservative than NAB's...but can your file service with CBA and meet all your expected future requirements? maybe...only your broker will know.

 

[Rolf Latham]

A bit out of the box, but you can ask your broker for a copy of the CBA serviceability result based on your file so you can see for yourself where your file stands with CBA.
.

I dont think this is out of the box at all.

If the borrowers headspace is up to it we take them through Suncorp to AMP doing the portfolio build and spend the time on the education......... it gives them substantial understanding and comfort, which works well for us because we have fewer "seeds of doubt".

ta

rolf