Equity Line question

[travelbug]

I was then told that without supplying the address for the new property I would only be able to access $50k (less than 1/2 of what I asked for). I said I was still looking and wanted to have these funds approved first. I was also asked if I wanted pre-approval on a loan for my intended purchase and I said no.

If you asked for $50k+ for deposit then said I did NOT want pre approval for the new loan he probably thinks you have no intention of buying a property.

Are you intending on buying a property with no pre approval for the loan? Or are you getting the loan elsewhere?

 

[Ms Jade]

WTF? I must have been living in la-la land. All this time I've assumed 'everyone' is accessing equity in LOCs or whatever to 80-90% LVR no q's asked. I don't remember having to justify cash-outs over $100k at a time... Doesn't sound like that's the case now, and am I right in comprehending that NCCP will curtail cash-out even further? If so, the only way to keep moving forward may be to re-fi to a different lender every few years to access equity. If this is so I may need to get the ducks in a row tout de suite!

 

[Rolf Latham]

Hi Jade

moving to another lender to release cash is even more of a cash out problem

You are then starting from below your current relationship with your current lender.

I dont think the NCCP per se will make things tougher, just lenders will use it as a reason to further curtail lending where they want better control.

Banks behaving badly.......

As a good example, just recently we were chasing a 50 % LVR for a start up foodie fran. Well established biz, client very solvent and could actually afford to pay the loan from othr biz income

Client had props incl PPOR.

Lenders said we wont give u the 150 k loan unless you bring ALL your properties across...................not one or 2, ALL !


When pressed..............we dont do split banking , we want full commitment and involvement, aka we want full and utter control over your body and soul.

I took that one a little further, with the same lender. The same scenario with NO current properties and only CASH to complete and one months operating capital............no problem.

Whats scary is the franchisor has NIL interest in leaning on that lender, because removal of one of their panel lenders would make their product much less saleable...................

ta
rolf

 

[Gargamel]

If you asked for $50k+ for deposit then said I did NOT want pre approval for the new loan he probably thinks you have no intention of buying a property.

Are you intending on buying a property with no pre approval for the loan? Or are you getting the loan elsewhere?

I intend to use the $ to buy an investment, I just want to get the other loan for that property through another lender. I wanted to get access to equity sorted before pursuing the other loan.

 

[VIC Lender]

As a good example, just recently we were chasing a 50 % LVR for a start up foodie fran. Well established biz, client very solvent and could actually afford to pay the loan from othr biz income

Client had props incl PPOR.

Lenders said we wont give u the 150 k loan unless you bring ALL your properties across................

Not sure how you can have a start up business that is well established?

If you are talking a 50% LVR on the business this is pretty generous given Foodies is not a teir one franchise with the majors. The security would be a fixed and floating charge (otherwise known as a mortgage debenture) over the company. Amortized in line with the lease / franchise agreement. In otherwords you are secured by thin air on a low end franchise!

It is pretty common in the commercial sector not to lend against business assets when another bank has first right of access to the directors / guarantors assets.

Also; franchise lending will have a covenant (like an on going condition), that servicing does not deteriorate whilst you have the loan. Raising funds through another lender can therefore put you in default of your loan if it has a condition such as "interest cover 2x to be maintained by client".

If the client wants the bank to fund 150k of a 300k milk bar equivalent franchise that is OK. But don't expect the bank to jump on it if you are giving all your property and equity to another lender.

P.s. 150k is also to small for a cash-flow /franchise lend IMO if it is standalone.

 

[VIC Lender]

I intend to use the $ to buy an investment, I just want to get the other loan for that property through another lender. I wanted to get access to equity sorted before pursuing the other loan.

What is the benefit of staying with IMB?
What rate are you on?

Why not move or do they have high exit fees?

 

[Spectre]

I intend to use the $ to buy an investment, I just want to get the other loan for that property through another lender. I wanted to get access to equity sorted before pursuing the other loan.

Noting this has gotten off thread.

1) you are right that you should be able to do this
2) if they wont then you refinance to a lender who will
3) That lender MIGHT be CBA, AMP, Citi or whoever.
4) Issues: Cash out, servicability of next IP - so say a lender may approve the cash out but then not approve on the IP as it doesnt pass servicing.

So if it were me I'd DM a broker or 2 and get them to run it through their servicing calculator to see what it says and gather their thoughts as for me, this thread about cashing out and what may or may not be possible is all pie in the sky until all the facts are presented.

 

[Rolf Latham]

Not sure how you can have a start up business that is well established?

Geeze Vic....cant u readminds yet


Existing client with established businesses looking to add another.

With that client, in the end we managed to get 120 k in cards at 20 % which in the end works out cheaper and easier for these guys ...........zippo security.

Lenders can lend to whom they like, how they like and for what they like.

My beef is simply the "bait and switch" that goes on..............maximum contribution might be a nice concept for the lender, but I suppose ones view is coloured by who butters your bread.

Then we can get onot some other lender view classics like " rental reliance"

ta
rolf

 

[VIC Lender]

With that client, in the end we managed to get 120 k in cards at 20 % which in the end works out cheaper and easier for these guys ...........zippo security.

Sound like stand up clients. I'm sure they disclosed the true purpose of the application when lodging their multiple credit card applications. If they ever end up in collections they could go to court for fraud.

I must be a mind reader. Crap deal and only breaching a couple of laws in the application process.

I'll assume you let someone else write that deal - I wouldn't admit to it on a public forum.

Sorry Gargamel - we have taken ove your post. Good luck on your hunt for a new mortgage.

 

[Saint]

Talk about a crap attitude and finger pointing. So far you havent built up much cred here Vic. Keep tooting that big 4 horn.

 

[Ms Jade]

Sound like stand up clients. I'm sure they disclosed the true purpose of the application when lodging their multiple credit card applications. If they ever end up in collections they could go to court for fraud.

Who's your cc provider, VIC? I've never had to disclose reasons on cc applications.

 

[Ms Jade]

Hi Jade

moving to another lender to release cash is even more of a cash out problem

You are then starting from below your current relationship with your current lender.

I dont think the NCCP per se will make things tougher, just lenders will use it as a reason to further curtail lending where they want better control.

Banks behaving badly.......

Thanks, Rolf (i think). But that is truly scary. Still, might be worth trying a re-fi where i can.

 

[Gargamel]

What is the benefit of staying with IMB?
What rate are you on?

Why not move or do they have high exit fees?

No exit fees, and not the cheapest rate either. I thought it would be easier as I'm an existing customer. Now it's looking likely I will refinance away.

 

[VIC Lender]

Who's your cc provider, VIC? I've never had to disclose reasons on cc applications.

Hi Ms Jade. Somewhere in either the terms and conditions or the application forms will be the disclaimers confirming you have been truthful etc etc. Obtaining funds via deception whether lying or not declaring your true intention could result in a decision by the other party to enter in to a financial transaction they otherwise would not enter to. In this case multiple lenders and a total of $120,000 would mount to a pretty serious case of fraud.

If the business went belly up and the banks lost money - I don't think it would have a pretty ending.

Happy to cop some flack and be the bad guy on this one.

 

[VIC Lender]

No exit fees, and not the cheapest rate either. I thought it would be easier as I'm an existing customer. Now it's looking likely I will refinance away.

Sorry to be a pain in the butt - I will stick to the original topic now.

You will find lenders should be asking more questions as they are legally responsible to ensure you can afford the loan and it is not unsuitable for your needs.

As part of this, if you intend to buy another property they have a responsibility to ensure you can meet the commitment that will come with the purchase.

I would go to a lender for the refinance as loan 1, deposit as loan 2 and a 3rd approval for the new purchase.

If loan 1 and 2 can be serviced on existing income they should be able to release the deposit so you can go shopping.

The bank can not force you to take the 3rd loan with them. But letting them pre-approve it will cover off on their responsible lending requirements and also give you a fall back position if another lender declines it.

This would also open up your options with lenders a bit.

 

[Gargamel]

I would go to a lender for the refinance as loan 1, deposit as loan 2 and a 3rd approval for the new purchase.

If loan 1 and 2 can be serviced on existing income they should be able to release the deposit so you can go shopping.

The bank can not force you to take the 3rd loan with them. But letting them pre-approve it will cover off on their responsible lending requirements and also give you a fall back position if another lender declines it.

This would also open up your options with lenders a bit.

Loan 1 and 2 can easily be serviced. I have no intention of using the same lender for all 3 loans, that's why I declined the pre-approval. I was under the impression that I should minimise my credit applications - I don't want to get knocked back for the loan I want because of too much activity on my credit record?

Thanks for all the comments, this thread has been educational

 

[VIC Lender]

If you apply for 1,2 and 3 at the same time - only one hit required with most lenders. Therefore 3 has no more impact on the number of enquiries.

 

[Spectre]

To say 3 credit hits doesn't impact on credit scoring is just not the case
And for most lenders, every time you click assess auto hits the cra. Which is why you can't do credit scoring without a privacy act for each loan
So 3 privacy acts = 3 credit hits

 

[Rolf Latham]

If you apply for 1,2 and 3 at the same time - only one hit required with most lenders. Therefore 3 has no more impact on the number of enquiries.

Hi Vic

"Most lenders" means which ones, because when we do 3 colas, or wbc onlines, or anz or NAB onlines as an eg, there are 3 separate enquiries.

Sure you can aggregate the enquiries into one loan amount, and that can be helpful to reduce activity, but as far as I am aware, thats only possible if one crosses the loans.

My primary concern here is that people may look at such advice and may fry their file for 6 to 12 mths.

While CBA doesnt pay too much attention to score per se, NAB, ANZ and WBC as an eg do, and should u fail score, they often wont give u a second look.

ta
rolf

 

[VIC Lender]

To say 3 credit hits doesn't impact on credit scoring is just not the case
And for most lenders, every time you click assess auto hits the cra. Which is why you can't do credit scoring without a privacy act for each loan
So 3 privacy acts = 3 credit hits

Firstly Garagamel is looking to refinance. So he needs a hit on his credit report to do that. App 1 (refinance) and app 2 (deposit) can be in the one submission. They are the same security so crossing is not relevant. One hit for refi and deposit. One application.

Hi Vic

"Most lenders" means which ones, because when we do 3 colas, or wbc onlines, or anz or NAB onlines as an eg, there are 3 separate enquiries.

Sure you can aggregate the enquiries into one loan amount, and that can be helpful to reduce activity, but as far as I am aware, thats only possible if one crosses the loans.

Crossing for one and two is irrelevant - as above. Only one hit (they are the same security)

While CBA doesn’t pay too much attention to score per se, NAB, ANZ and WBC as an eg do, and should u fail score, they often wont give u a second look.

You don’t need to convince me CBA is the best lender here. Given the scenario I have been saying that all along.

Westpac can issue a pre-approval without a CRAA (naturally they would be happy if they did one 5 minutes before). NAB can do manual CRAA so only one required. CBA system won’t do two if you lodge the deals at the same time.

You can also do the pre approval as part of the first app (refi and deposit) and only do a partial drawdown. 1 hit for all 3.

QUESTION

If your argument is correct a client would be mad to split lending between a few lenders. Once properties have gone up in value you require multiple hits to multiple lenders to access equity from your portfolio???