Frustrating lender

[j_p]

MY GF is trying to get funds from her IP to either purchase another IP or a PPoR. It is a lender that has their own "brokers" and won't deal with our broker directly (this is an old loan before we met) they also keep trying to push cross coll (yes we're running).

Due to the time it takes this lender to do anything we wanted the funds in her offset account so we can move quickly when needed. The lender wants to know the "purpose of funds" and wants a signed contract of sale. Claiming it's an NCCP regulation as the IP is been financed to 90% and LMI is involved and they need to assess that any additional funds we borrow are affordable.

On the phone he claimed to have 25 years experience as a MB, financial planner and investment adviser and was not aware of any negatives to crossing properties and it would save us money.

After my discussion with this Broker he sent an email to my GF with comments such as;
"As a mortgage broker, financial planner and investment adviser, and under my ASIC licence, I am bound to give my clients advice that is the most beneficial to them. From what I know of your financial situation, under this scenario, crossing the properties is the best solution for you. "

He also stated how he was concerned about my advice to avoid Xcolling.

Anyway as I see it the easiest options are;

Refinance with my broker, which will require more LMI as the previous loan had some paid already. This will avoid dealing with the lender ever again

Borrow the money for shares and dump it into a top200 fund/blue chips until we want the funds, obviously this exposes the money to market risk (good or bad), entry and exit costs.

Any other ideas are appreciated, I'll be speaking to my broker later.

 

[Marty McDonald]

lender please?

 

[Rolf Latham]

Nuffink wrong with xcoll

Mercury and lead are cumulative too

Sounds like mha or the like?


Ta

Rolf

 

[tobe]

Just ask to speak to their manager, and if that doesnt work explain you will be taking the matter to the banking ombudsman. That usually gets their attention.

While its not an NCCP requirement, it could be their own cash out policy, so you might be unable to access cash with that lender. Its then your decision whether to refinance now and pay extra LMI, or wait till you have found the right property, give them the contract and then get the cash out.

 

[Jamie M]

Easy solution is to swap brokers/lenders UNLESS there's a high monetary cost in doing so.

Cheers

Jamie

 

[NPB]

MY GF is trying to get funds from her IP to either purchase another IP or a PPoR. It is a lender that has their own "brokers" and won't deal with our broker directly (this is an old loan before we met) they also keep trying to push cross coll (yes we're running).

Due to the time it takes this lender to do anything we wanted the funds in her offset account so we can move quickly when needed. The lender wants to know the "purpose of funds" and wants a signed contract of sale. Claiming it's an NCCP regulation as the IP is been financed to 90% and LMI is involved and they need to assess that any additional funds we borrow are affordable.

On the phone he claimed to have 25 years experience as a MB, financial planner and investment adviser and was not aware of any negatives to crossing properties and it would save us money.

After my discussion with this Broker he sent an email to my GF with comments such as;
"As a mortgage broker, financial planner and investment adviser, and under my ASIC licence, I am bound to give my clients advice that is the most beneficial to them. From what I know of your financial situation, under this scenario, crossing the properties is the best solution for you. "

He also stated how he was concerned about my advice to avoid Xcolling.

Anyway as I see it the easiest options are;

Refinance with my broker, which will require more LMI as the previous loan had some paid already. This will avoid dealing with the lender ever again

Borrow the money for shares and dump it into a top200 fund/blue chips until we want the funds, obviously this exposes the money to market risk (good or bad), entry and exit costs.

Any other ideas are appreciated, I'll be speaking to my broker later.

Sounds like Rams.

Doing something for 25 years does not mean you have been doing it right.

 

[The Y-man]

MY GF is trying to get funds from her IP to either purchase .... a PPoR.

Be aware the tax implications of this (as in can't claim interest costs on this portion).

The Y-man

 

[tobe]

Sounds like Rams.

Doing something for 25 years does not mean you have been doing it right.

Rams dont do financial planning et al, and have a very simple cash out policy (unless this paritcular individual was making up the cash out issue).

 

[Peter_Tersteeg]

Definitely avoid the cross coll. You're clearly not really happy with the information they're giving you and permitting them to cross coll only stitches your girlfriend up with the same lender even further, it precludes you from moving away from them.

Additionally there appears to be LMI involved (even with cross coll), so the LMI premium will be based on the total lending across the portfolio, not the lending on each property. LMI is calculated as a percentage of the money borrowed, but that percentage has price points. This means that the LMI premium will be higher if your cross multiple properties.

I've never seen a case where cross collateralising actually saved money on LMI. Loans can be structured either way to get the cheapest LMI outcome, in most cases crossing costs more.

Clearly under my ASIC license, I have a different opinion on what is the best advice under the circumstances based on the limited information available.

Lenders do have a right to ask what you're going to do with the cash and if you will use it as a deposit, the law kind of does require them to assess the future borrowing (it's not written in law, but it's a logical conclusion which lenders tend to write into their policy). This is a good reason not to use a low servicing lender with LMI in the first place.

I'd suggest being adamant that you want to avoid crossing. Do your best to work through the cash out problem, it should be possible. If all else fails, personally I'd probably suck up the cost in LMI to move and find a more appropriate lender, but that's a cost/benefit analysis you need to work through more carefully. It's a significant short term cost, but could be a far greater long term benefit; it depends on what the longer term objectives are.

 

[Terry_w]

Yes your banker is not acting in your best interest. As a lawyer I suggest you avoid cross collateralising securities.

Also beware of the tax implications of borrowning and putting into an offset.

 

[Redom]

Due to the time it takes this lender to do anything we wanted the funds in her offset account so we can move quickly when needed. The lender wants to know the "purpose of funds" and wants a signed contract of sale. Claiming it's an NCCP regulation as the IP is been financed to 90% and LMI is involved and they need to assess that any additional funds we borrow are affordable.

It's not unusual for a lender to 'control' the release of funds at 90% + and assess the serviceability of future debt that you may incur with those funds. It's a bit of a pain, especially for those that are looking to set up their finances before actually having a property in mind - but part of responsible lending.

After my discussion with this Broker he sent an email to my GF with comments such as;
"As a mortgage broker, financial planner and investment adviser, and under my ASIC licence, I am bound to give my clients advice that is the most beneficial to them. From what I know of your financial situation, under this scenario, crossing the properties is the best solution for you. "

Personally, IMO, someone namedropping all their qualifications in an email sounds insecure. In terms of the advice, I don't know how it could possibly benefit you. Why can't you just do it separately? It ends up being the same level of debt, same level of assets - just correct structuring.

Comments in red.

 

[Brady]

As a mortgage broker, financial planner and investment adviser, and under my ASIC licence, I am bound to give my clients advice that is the most beneficial to them. From what I know of your financial situation, under this scenario, crossing the properties is the best solution for you.

Jack of all trades MASTER OF NONE.

Terrible! x-coll shouldn't happen ESPECIALLY WITH LMI

 

[j_p]

Hello,

Thank you for your comments. Certainly clarified that I had the right perspective on the advice given, if not the in depth consequences of everything.

I have spoken to my broker about some ideas. My GF and I are discussing if the cost of moving all loans away from the lender is worth the trouble.

who is "mha"?

 

[albanga]

Who is the lender? And how much LMI did you originally pay?

 

[Mick C]

1. Shop around for valuation and you may find there are lenders that will have a higher valuation...so your LVR may be 80-83% etc..with lower or no LMI

2. Apply for a new loan ( ie new purchase) at 90% with NO lMI or 85% -a few around in the market place now....