Homeside 95% lvr

T

The Chaser

Hi there

I have been doing some initial research for a suitable loan for our next IP purchase. I am after a competitive full doc I/O variable rate loan with a high lvr (prefer 95% lvr with LMI capitalised if possible). The loan will most likely be in a PAYG personal name (or if not, than in a DFT with corporate trustee). Any recommendations based on recent deals would be much appreciated.

I have also found a variable rate product from Homeside Lending with an initial interest rate of 5.07% (5.12 comparison rate) and a 95% lvr. Can anyone answer the following questions:

1. Are Homeside products only available through a mortgage broker? (I will ultimately use a MB to arrange the finance, but I am trying to do some degree of due diligence first.)
2. How long can the loan be I/O for?; and once this I/O period expires is it possible to request another I/O term rather than reverting to P&I?
3. What are the approval times like with Homeside at present?
4. What percentage of rental income do they consider?
5. Can I capitalise LMI?
6. Are there any deferred establishment fees?
7. Most importantly, can anyone pass on their own experiences as a client with Homeside?

Any replies would be greatly appreciated.

Thanks in advance
Angela :)
 
Hiya

1. Are Homeside products only available through a mortgage broker? (I will ultimately use a MB to arrange the finance, but I am trying to do some degree of due diligence first.)

As far as I am aware that is correct

2. How long can the loan be I/O for?;

5 years

and once this I/O period expires is it possible to request another I/O term rather than reverting to P&I?

Needsa new loan app, and likely new LMI if the LVR isnt now below 80 %

3. What are the approval times like with Homeside at present?

2 to 3 weeks can be expected

4. What percentage of rental income do they consider?

No relevant in isolation, I can comment that their serviceability model would be in the top 3 of the banks

5. Can I capitalise LMI?

NO


6. Are there any deferred establishment fees?


Is a bank in the business to make money :) Yes. 1200 if paid out within 4 years

7. Most importantly, can anyone pass on their own experiences as a client with Homeside?

Nah, dont have any of my personal business with them. Generally Client feedback is ok


In closing, if you want a major and you arent an existing clietn, then Homeside is your only "bank" option at that sort of LVR.

ta
rolf
 
I got my most recent IP financed through Homeside.
I needed to get approval in a big hurry and the other major banks were being buried under the wave of FHB applications and had long turnaround times just to look at an application.
Homeside gave me conditional approval within a couple of days and unconditional (following valuation) within a week. I'm was very impressed.
All went smooth and the deal settled in around 15 days after the initial application was lodged.
I was very happy with the deal up front and the ongoing service.
 
Hi Rolf

Thanks very much for the detailed response. Sounds like Homeside stacks up well at this stage. I am actually also an existing client with ANZ on a Breakfree package that includes IP borrowings (IR 5.11%). I also use ANZ for all our personal banking business and so was thinking that in the current economic environment it might not hurt to 'spread the love' a little and use a different lender. Plus ANZ looked like their max LVR was 90% - is this wrong for existing clients? Would Homeside and ANZ offer the same lvr/ir deals if I was purchasing through a DFT with corporate trustee?

Rob - I don't suppose your purchase was financed using a DFT structure? If it was, did you still qualify for the 95% lvr?

Thanks again
Angela
 
One of my friends bought his first IP and got it financed through Homeside. They got a pretty good deal, however, they were delayed by a week for their settlement.
 
Last edited:
Angela

Same answers as per Propertyinvesting.com but in addition.

1) Anz maximum is 90% lvr less LMI.

Also if you purchase using a Corporate Trustee the Breakfree benefits such is interest rate discount will not apply as ANZ do not discount Company application deals.

Homeside do still offer such rate discounts.

You may want to put your application quickly as unless your Broker is 4 Star rates with NAB he wont be able to get you the 95% LVR. This LVR may also disappear over the next few weeks if the grapevine is correct.
 
Qlds007 said:
You may want to put your application quickly as unless your Broker is 4 Star rates with NAB he wont be able to get you the 95% LVR. This LVR may also disappear over the next few weeks if the grapevine is correct.
Click to expand...

Hi Richard

Thanks for both of your replies. I was wondering whether this deal could be about to disappear! 95% lvr seem to be few and far between, even for full doc. Does obtaining preapproval upfront (whether conditional or unconditional) lock-in that I would get 95% lvr once the actual IP deal goes through, or can Homeside still choose to reduce the lvr to 90% (if policy changes) in the period after preapproval but before deal paperwork is processed?

I also wanted to double check the DEF's. You have mentioned $900 and Rolf mentioned $1200 inside of 4 years. I have found some info that suggests there is an exit fee of $300 plus the early repayment fee of $1200 (inside 4 years), giving a total of $1500 if I sold inside 4 years, or $300 if I sell after 4 years. Have I understood this correctly? Are there any other yearly or monthly fees with Homeside?

Thanks again
Angela :)
 
Rolf Latham said:
Hiya

What is the loan size, and are you looking at variable or fixed.

ta
rolf
Click to expand...

Loan size would be approx. $400K with a variable interest rate.

I would prefer a fixed rate in the current IR environment but we intend adding value to the IP in the first 12 months and then looking to access any increased equity after a revaluation. I concluded that if the reval was unfavourable I would be stuck, as I couldn't just move the total borrowings to another lender without incurring large break costs on the fixed rate loan.

Cheers
Angela
 
Angela

Of course you are assuming that you found a Bank that had a panel valuer who was prepared to lend and who agreed with your valuation post the reno.

See it all the time clients believe the property is worth XYZ yet the valuer says ABC and has comparitive sales to back it up or alternatively the clients valuer says it is worth XYZ and he is not a panel valuer of anyone.

Why would you not take a variable rate loan and then fix it after the reno if you agreed with the valuer. Of course max lvr on a refi would probably go back to 90%.
 
Hi Richard

I totally agree with your sentiments. I certainly don't assume that a particular reno guarantees a particular result on valuation (too many variables). I tend to wear 'reality' spectacles rather than rose coloured glasses. It helps hubby is a builder and keeps us well grounded as well. :)

What I was actually referring to was the situation where a lender may change their policies in the interim (eg. on lvr) and perhaps be using more conservative valuers. In this scenario a borrower on a fixed rate is locked in (subject to hefty break fees of course) with that lender and can't just shop around with the competition for a more favourable lender post reno. Unless paying the break fees is commercially sensible, all I could do would be wait out the fixed rate period despite possibly having had the opportunity to refinance elsewhere and access any extra equity sooner.

If not for the 'add value' aspect of this next IP, I would love to have fixed for an extended period in the current IR climate, as IMHO I believe that it would outperform the variable rate over that time - at worst I would have the comfort of fixed repayments and would be equally happy with this outcome. Your suggestion to reconsider fixing after the reno sounds good to me. :)

Angela
 
Be mindful that there current processing times are WAY out.

14 business days + a further 5 if LMI is required. Add another day or 2 if the application doesn't "auto approve" and oif further information is required at least another 2 weeks.

Usually Homeside are very quick with their service levels but as they are now 1 of few offering 95% they have a HUGE backlog. This has been the case for the past 2-3 weeks and doesn't seem to be showing any signs of improving.
It will be very interesting to see how long the 95% LVR will last astheir exposure at that bracket must be increasing at a rapid rate.

All in all if you have close to a month up your sleeve and no finance clause (or can have it extended way out) then a viable option.



Regards
Steve
 
One thing...
Rolf said in the second post:

2. How long can the loan be I/O for?;

5 years

and once this I/O period expires is it possible to request another I/O term rather than reverting to P&I?

Needsa new loan app, and likely new LMI if the LVR isnt now below 80 %
Click to expand...

I'm considering Homeside as my lender so I asked my broker and he told me that after the inital 5 years they would review your personal case and if there's no problem and you still can service the loan, they would extended it for another 5 years without any extra fees or extra LMI.

Could anyone confirm this? Do you need to apply for a new loan or not?
 
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