Disheartened and Dissapointed

[ando]

G'day People

I am need of some advice.

I have been looking at purchasing my first IP and have had my finance knocked back by 2 lenders. My broker gave me me the impression that finance would be ok and gave me figures of how much certain lenders were willing to allow me to borrow and it was well above what I needed yet I have been rejected

I was told it was probably to do with my line of credit, still have $255,000 on my PPOR valued at $420,000. I needed $302,000 for my IP, therefore a total loan value of $557,000 ish.?

What is the best way for me to get my max loan value up by about another $17-$20k

I am losing hope.

Cheers

Daniel

 

[The Y-man]

I was told it was probably to do with my line of credit, still have $255,000 on my PPOR valued at $420,000. I needed $302,000 for my IP, therefore a total loan value of $557,000 ish.?

What is the best way for me to get my max loan value up by about another $17-$20k

Missing other crucial info to make a decent observation - what's your income like?

The Y-man

 

[tess85]

And how much money have you saved up for the deposit?

 

[CG++]

Income,
rent for new prop,
debt (credit cards),
Interest rate on current.

 

[Aaron Sice]

cash bond, cash bond, you're my cash bond....

 

[ando]

Income is around $64K
Aprrox Rent $290 - $310
No other debt
Interest Rate on current LOC is 6.2

I was wanting to use the equity in my PPOR.

 

[Kristine..]

What reasons have you been given for the refusals?

If it is a matter of servicing then usually a lender will negotiate the loan amount provided that you can demonstrate funds to complete

A bit more information from you would be helpful

Cheers

 

[ando]

cash bond, cash bond, you're my cash bond....

Cash Bond? How does that work

 

[HomeBuyAU]

Maybe see if you can find someone at your local bank to talk to just to see where they think you stand and what options you have. After that go and do some comparisons on current bank loan packages, approach the bank that offers the best deal for you. I have found you can often find a good consultant at the banks but you might need to try 2 or 3 and your under no pressure to sign with them and then you can see what they are not liking in your situation that you need to fix. Just don't let them pressure you into signing until you have done some of your own research, if they are like that then walk away and find a better one.

 

[ando]

What reasons have you been given for the refusals?

If it is a matter of servicing then usually a lender will negotiate the loan amount provided that you can demonstrate funds to complete

A bit more information from you would be helpful

Cheers

Apparently it is to do with the income which I imagine then has to do with the servicing of the loan

"Due to servicing only use 60% of proposed rental income maximum loan to be considered is xxxxxxx for refinance, land purchase and construction "

 

[bespoke]

Apparently it is to do with the income which I imagine then has to do with the servicing of the loan

"Due to servicing only use 60% of proposed rental income maximum loan to be considered is xxxxxxx for refinance, land purchase and construction "

AHHHHH that sounds like thats the problem... Your broker should have known what the % of rent would be taken as servicing of the loan. I'm currently going through some refinancing and this is one of the main things my broker is looking at as the figures are tight.

Surely the broker would have done his/her sums with this %.................?

 

[Rolf Latham]

that sounds rather bodgy

60 % is quite low

ta
rolf

 

[CG++]

What bank?

 

[ando]

What bank?

Homeside Lending

 

[Mez]

I know how you feel, but don't give up, as the others have said find out what the barrier is and surely there is something you can do...

60% of rent is quite low, we just refinanced with CBA recently and they count 75% of rental.

I would definitley try some more lenders, best of luck

 

[Qlds007]

Is the property an inner city unit or holiday unit if so that could account for it.

Lenders like Heritage take 0% / Nil / zippo / Nothing of the rental income into consideration where your property is of a specialist nature.

 

[lizzie]

also can depend on how many dependents you have ... the servicibility of a single guy is a heck of a lot higher than someone with a wife and 4.2 kids on the same income.

is yous loc fully drawn down? if not, can you then reduce the limit?

 

[Spectre]

Apparently it is to do with the income which I imagine then has to do with the servicing of the loan

"Due to servicing only use 60% of proposed rental income maximum loan to be considered is xxxxxxx for refinance, land purchase and construction "

Interesting as if you look at the servicing calculator it works on 80%.

So what was the rationale behind them cutting it down another 20%?
Or did the guy input 80% instead of 100%?

It wouldnt have more to do with they increased their assessment rates?

 

[Piston Broke]

Given the scant info you provided, at first glance I'd say your broker is a NOOB
And no that does'nt exonerate yourself from the learning process either.

 

[Kristine..]

The Romans Knew A Thing Or Two ...

Ok ando

So let’s get this straight:

You are single
You have no dependents
Earn $64,000 gross (plus superannuation)
Have no credit cards or personal loans, HELP debts or other financial commitments

Your current Home Loan is a Line of Credit fully drawn at $255,000 @ 6.2% variable which would be assessed at $1,562 per month provided that you have 30 years remaining on the loan. If less than 30 years, the LOC will be assessed as P&I over the remaining term

You want to buy a property for $302,000 which will rent for about $300 per week

Have I missed anything here?

You want to use equity in your PPR to pay for stamps, legal fees, adjustments etc, so you need approx $318,000 to settle

I figure there are at least 13 main stream lenders which will qualify you for a new loan of more than $318,000

However: If you are intending to refinance the existing mortgage loan then all borrowings will be assessed at the new lenders Servicing Assessment Rate. Homeside are currently using 8.25% even though you would probably be eligible for their Special Offer rate of 5.82%.

Which lender has the current mortgage? Has your broker suggested taking a Supplementary Loan over your PPR and then using those funds to settle on the new purchase?

This would be quite straightforward and a cost efficient way for you to structure the deal. The new funds will be readily identifiable as ‘belonging’ to the new property and the Servicing Assessment Rate will only be applied to new borrowings, not seasoned borrowings.

However, if your broker is a Mobile Lender from one of the Banks, then they can only offer you their house brand products. If your broker is an independent broker then they should be looking at the Roman Road method – the Romans kept it simple, built in a straight line even if that meant bridges and tunnels, and then happily marched from Point A to Point B as directly and efficiently as possible.

From what you have described of your circumstances, this deal should certainly be a Roman Road deal.

Cheers
Kristine