Finance risk while growing a large portfolio

[Redom]

I just talked to my broker and he strongly believes the policy won't apply to applications already submitted but not yet approved. He said it would only apply to applications submitted after this notice went out. Any precedents to support this? He calmed my nerves but I'm still nervous as hell.

I'm not too sure jerrybee, others with deals in the pipeline with AMP at the moment may be able to advise better.

I got blindsided by Westpac's expat change a couple weeks ago. Application in over the weekend, change announced on Tuesday morning.

 

[jerrybee]

I got blindsided by Westpac's expat change a couple weeks ago. Application in over the weekend, change announced on Tuesday morning.

Christ and the new policy applied to the application you submitted before the change? I'm not going to be able to relax all weekend now.

 

[Peter_Tersteeg]

I just talked to my broker and he strongly believes the policy won't apply to applications already submitted even if not approved. He said it would only apply to applications submitted after this notice went out. Any precedents to support this? He calmed my nerves but I'm still nervous as hell.

That does tend to be standard practice.

 

[Redom]

Christ and the new policy applied to the application you submitted before the change? I'm not going to be able to relax all weekend now.

I'm not sure, but you may be OK - mine was for a pre-approval and was passing the date they stated. On the AMP email it states: Credit Policy changes - effective Monday 18 May 2015.

Cheers,
Redom

 

[jerrybee]

That does tend to be standard practice.

Oh sweet Jesus let me go sit down and recover from the 17 simultaneous heart attacks I just had. While it's no confirmation it'll help me sleep easier tonight. Thank you!

 

[jerrybee]

I'm not sure, but you may be OK - mine was for a pre-approval and was passing the date they stated. On the AMP email it states: Credit Policy changes - effective Monday 18 May 2015.

Cheers,
Redom

Alright thanks!!

 

[Mick C]

I can confirm ....Current deal in the pipeline are not affected.

 

[jerrybee]

I can confirm ....Current deal in the pipeline are not affected.

Where did you get confirmation from, do you have a contact there?

 

[Mick C]

Where did you get confirmation from, do you have a contact there?

AMp credit themselves....i have 3 deals in the pipeline...and i asked around 4ish this afternoon.

 

[jerrybee]

AMp credit themselves....i have 3 deals in the pipeline...and i asked around 4ish this afternoon.

Great thanks. When did this news actually hit, I assume this afternoon?

 

[MIW]

Thanks Redom, I hadn't really considered the possibility of all IO loans getting stuck on PI. Risk mitigation is taking up more of my thoughts.

Happened to me few years back. I did not know the 10 years were up and 3 loans reverted to P&I. I had to refinance. Luckily circumstances were good, lots of CG plus serviceability was there!

 

[MIW]

Reading the post to the end made me realise how conservative I was, some of you on SS have really different risk appetites!
I remember few years back when attending a seminar, I was told by some younger people, Gee, how slowly and hard way I built up my portfolio (Basically since I never drew on equity, just saved up for deposits)?
Well, at least today I can revert to P&I and be save but I like this thread very much as no one has a crystal ball of the changes to come, as governments and others can change rules and regulations as they please!

 

[jerrybee]

Guys my broker is at a conference right now with some AMP people and he's confirmed the new serviceability calcs kick in on the 18th, AND it won't be retroactively applied to applications already in the pipeline. So if you have any clients that want one last bite of this apple now is the time. I'm surprised it's the 18th - do they generally provide such a long warning period?

 

[jerrybee]

Other details:

-They are changing the way they count negative gearing
-They still only count half the mortgage if it's shared, but he said they're changing the rent calcs
-He said on the plus side, living expenses are a lot more forgiving now, apparently they used to have one of the most conservative

 

[Rolf Latham]

-He said on the plus side, living expenses are a lot more forgiving now, apparently they used to have one of the most conservative

AMP have been very friendly of late

Welcome calls etc in the last 2 weeks when lodging deals

with their broker side of the bank with probably the largest slice of any lender coming from "stretched" investors. AMP treasury alone would have concerns, id expect APRA reasoning is a convenient and exit.

AMP are a niche lender, and they do have a great Global Limit product that we use on our financial planning side, but aside from that ..............

ta
rolf

 

[danwatto]

Not so sure about AMP and serviceability any more danwatto - i just got an email that seems to indicate (haven't confirmed yet by calling my contact) that they won't take mortgage debt held with other institutions at actual repayments anymore. In fact, they'll take it at assessment rate & P&I - which is very conservative.

Quickly turns them from a great serviceability lender to one of the more conservative ones - will be very nasty for any investor with a portfolio looking to do a cash out.

Specific words from the broker email below:

Factoring external debts

Loan repayments for external debts (mortgages, personal loans, overdrafts, margin loans, and line of credit) are to be assessed using the higher of:

- Repayments calculated by using AMP Bank?s loan assessment rate against the total limit of the external debt (on Principal and Interest terms)
- The sum of the borrower(s) declared monthly repayment amounts

In line with this topic - an I/O extension with THIS change to servicing? Given one of AMPs few strong points is servicing, investors using them with other properties are likely to need to have to refinance to extend terms.

No doubt that APRA's behind the change.

Cheers,
Redom

Damn and I'm renovating this place a bit too, was hoping to do an LMI cashout to 90% after 6 months since last val. I guess that's off the cards now and I'll have to count my LMI paid already as a one-off cost.

With all these policy & APRA changes, it looks like the party is over for us LMI investors and we are forced into moving to < 80% purchases in the long run. In 4 years when we have to renew our I/O periods, will have to refi to another lender and lose that LMI paid already anyway, since servicing with our existing lenders may be affected..

Well it was fun while it lasted, alot of us already pushed the limit past our expectations

On another note - this probably puts an end to the "order of lenders" loan structure planning that most are doing in their portfolio expansion. The order of lenders will probably be turned upside down after the policy changes or at least inside-out or flattened alot.

 

[tobe]

and ANZ are now relaxing their policy, in theory...

Improvements to Loan Change Requests!

Aspart of our ongoing commitment to simplifying our processes, we are pleased to announce that from 11th of May, via the loan change request process you can now:
? Changea Home loan to a Residential investment loan and vice versa
? IOExtensions?Loans with LMI?On a loan with LMI you can now submit a loan change request for interest only extensions, where the LVR does not exceed the maximum threshold for the property type(e.g. less than 80% for Residential Standard). This change canonly be submitted via the loan change request form.
Note:If an LMI policy is present, the policy will be cancelled. Additional lending above the LVR threshold will require a new LMI policy and premium.

 

[jerrybee]

Damn and I'm renovating this place a bit too, was hoping to do an LMI cashout to 90% after 6 months since last val. I guess that's off the cards now and I'll have to count my LMI paid already as a one-off cost.

Maybe you could quickly squeeze it in, as I said the new policy isn't due to kick in until the 18th. Even if your renovation hasn't finished yet the value has probably still gone up.

 

[albanga]

Other details:
-He said on the plus side, living expenses are a lot more forgiving now, apparently they used to have one of the most conservative

But I thought there was a crackdown on this saying that brokers need to delve into living expenses on a personal level and using things such as the HPI were now being strongly discouraged?

 

[jerrybee]

But I thought there was a crackdown on this saying that brokers need to delve into living expenses on a personal level and using things such as the HPI were now being strongly discouraged?

No idea I'm simply relaying on what he told me