Did you know..................!!



From: D R


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HI All,

Did you know that when you go to apply for a new loan for investment
purposes that the banks(NAB atleast) assess it buy doing the following:

An Interest Only loan is based on paying P&I payments in terms of
affordablity(DSR for those in the know).

In other words if you want to borrow 200k over 25 yrs @ 6.5% then they will
consider your payments as being ~$1350/mnth for a P&I loan as appossed to
~$1083/mnth for an IO loan. This has serious impacts in terms of cashflow.

Now that's not the end of it. If your application to purchase this IP is
based on taking a IO loan at the start, then they will make it even harder
for you by considering it as making P&I repayments over 20 years instead of
25 yrs.

To avoid this, because your DSR is an issue. You need someone on the inside
(of the bank that is). Hence, why it is so important to have a good
relationship with your banker or broker.

They will process your application based on it being P&I to start with. Once
"head office" has approved the funds then you can get it changed to IO.

This is my opinion only and I would expect that all other banks/non banks
will differ for one reason or another.

If anyone knows better then please step forward. I would like it to be
proven otherwise.


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Reply: 1
From: Ian Findlay


HomePath does this too. They are worse though.

They took our LOC loan, assumed that we owe the maximum possible. Then assumed interest rates are 2-3% higher (just in case), then assumed that we'll pay it off in 15 years instead of 30.

All up, this caused our monthly payments to triple which in turn caused probs with our DSR.

Can't they get real?

You would think that they'd bend over backwards for people with IPs after all they are important and lucrative clients and secondly relatively risk free compared to margin lending etc.

Just my tuppence worth,

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Reply: 2
From: Rolf Latham

Hi Folks

But wait there's more, believe it or not there are actually far more conservative lending models out there, CBA and NAB are middle of the road.

If you want the steak knives though there are lenders that will give your literally truckloads more depending on who you are, what you do and your overall assets and liabilities position.

Its is also not as clear cut as to say that Lender A will lend more than B, simply because inputs into the models vary markedly. Some accept company cars as income, some accept bonuses and commissions as 100 % income, some dont accept them at all etc etc.

Have a chat with your local independent mortgage broker and you may be suprised, then again you may not?

In a lot of ways going direct to a lender can sometimes be like going to the pharmacist without first getting a prescription.

This makes you very very unsure about your medicine, and instead of concentrating on improving your health (wealth) you are constantly concerned about your next prescription, and indeed if the old one is going to be a problem.

There are times when going direct to a lender is very appropriate, such as when they have you stitched up tighter than the elastic in a golf ball. There are many more times when going via an independent broker will save you hair and money.

This does not mean that a broker can get blood out of a stone, simply thatyou can cover more bases more quickly.

And, just to finish this novel, some will say that from their experience brokers are useless, expensive, or sharkey. So are some GPs, Real Estate Agents, Car Mechanics, teachers. Seek and you will find.


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Reply: 2.1
From: The Wife

I agree with all the above posts,

I also feel its a case of knowing someone 'on the inside', this is why I have just spent an exhausting 2 months talking finance with a particular lender, I decided the only way to change the way a bank thinks, was to become a bank.

Whilst I haven't become a bank as yet, I do now have access to good loans, good people and lots of creativity, not to mention good wrap loans!

Slowly slowly, this is a work in progress, I am slowly but surely getting myself to the heart of the banking industry, and each step along the way is a step closer to better reforms and conditions for the Australian Investor.

My aim was , and still is, to source good quality loans for people who want to be more than average, for people who have vision, and want more than just a house loan here or there, I want to be able to pass on finance to people, as I would like it,

consistent, available, quick, as painless as possible, and via a facility that understands that serious investors are looking at 20 IP's plus.

So, my success so far, (as of yesterday actually) is that, I now have an underwriter for a HUGE amount of money, expressly for wraps.

They are asking me to present any other case scenarios of investment type property as they come along.

As I said, slowly slowly I'm getting myself into the bank world, I hope I get everyone's support to help change the way banks think about serious investors.

If you would like anymore info on loans, please email me.

cheers, TW

~Life is a daring adventure, or nothing at all~
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I do now.........!

Reply: 2.1.1
From: The Wife


I can do anything!! :eek:)

Seriously, yes, we can do commercial loans!

The aim is going to be, getting people across the line.


~Life is a daring adventure, or nothing at all~
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I do now.........!

From: Dave :)

"Which Bank"?

..yeah, ok, but will you offer NetBanking?


..I'm kidding TW - well done and I commend you for wanting to make some changes in the industry.


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Reply: 3
From: Pierre .

Actually, I believe it is even more conservative than your example. I believe the NAB calculates repayments based on the long term variable average of aprox 9.5% pa.

The good news with this 'though is that you can get current interest rates at aprox 6.5% fixed for 5 years - a 3% discount to the long term average. I'd call that wholesale rates!

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Reply: 3.1
From: Paul Zagoridis

On 6/1/01 9:31:00 AM, Pierre . wrote:
>The good news with this
>'though is that you can get
>current interest rates at
>aprox 6.5% fixed for 5 years -
>a 3% discount to the long term
>average. I'd call that
>wholesale rates!

I'd call it closer to a 30% discount actually.

3%/9.5% = 31.578947%


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