How to bypass the LMI

[Gentle_Chief]

Hiya Guys,

Yesterday I was rejected by Bankwest's LMI QBE for a 90% Lend on our 9th IP. Was totally shattered. And still am. But we are now proceeding with a 80% Lend with Westpac. Luckily I do have the funds to complete this purchase and do know that we can get it across the line.

BUT, the future of Investing in Resi in such a tight Lending scenario does look a bit Dismal, I must admit. Kindly note that missus and I have a combined income over the 200s p.a. and all our IPs are Cash Positive. Hence, serviceability is not a criteria. Our DSR looks sound.

Today I learned that the reason for refusal of the loan was attributed to one factor. Too many acquisitions too quick.

Huh....?

I am now looking at ways to break this funding deadlock and surge forward. I know it is going to be hard. But hey isn't that Winning all about - overcoming hurdles?

 

[Spectre]

Why wouldnt you just decrease lvr with BW to 80% rather than a new hit on the CRA with Westpac?

 

[Rolf Latham]

Perhaps more related to busy file other than just new purchases

If you have had 9 purchases in sy 15 mths, then youd have 12 plus CRAA enquiries at best

ta
rolf

 

[Gentle_Chief]

Why wouldnt you just decrease lvr with BW to 80% rather than a new hit on the CRA with Westpac?

Good point Spectre.

I checked with the Home Finance Manager, apparently Westpac does not need to do another Credit check on our CRA file. We have a pre-approval in place.

I dont want another hit on the file. We have had 12 in the last 12 months.

 

[Rolf Latham]

I checked with the Home Finance Manager, apparently Westpac does not need to do another Credit check on our CRA file. We have a pre-approval in place.

not my experience if the loan amoun changes, OR the pre approval is more than 14 days old, but things are likely different at Branch level

ta
rolf

 

[Gentle_Chief]

Perhaps more related to busy file other than just new purchases

If you have had 9 purchases in sy 15 mths, then youd have 12 plus CRAA enquiries at best

ta
rolf

Spot on Rolf.

I ordered for our CRA file from VEDA Advantage a few days back. Online it costed about 47 bucks and I had to wait anxiously for 24 hours before all the background verification was done to check "I am who I am".

And it arrived, password protected and all.
Was shocked to see that there were 24 Enquiries

12 hits in the last 12 months alone. In this period I have taken only 4 IP Loans! So that doesn't tally does it?!

Drilled down to see who were the other suspects who did an enquiry on my file.

- The banks (Westpac, St.George & ING) with whom I had applied the loan. So that's okay...
- LMI companies (2 from QBE and 2 from genworth)
- Optus
- Citibank

Bludgy hell!

I can understand the banks doing the check.
But why can't the LMI use the same enquiry, they have done another check the very next day. And then they turn around to say well you have too many hits.
D'uh....

And Optus

Oh yeah I have a Post-paid Blackberry package with them. Gosh if I only knew! I was anyway happy with the Pre-paid service.

And citibank! Oh yeah I have a credit card with them, it hasn't seen daylight since I put in my wallet some 2 years ago.

So guys, be savvy, never underestimate the small thingys come to bite. Well, my advise would be dont take a hit on your CRA file whatever you do:

a) return your DVDs from Blockbuster on time
b) Pay that speeding fine on time
c) Dont go Post-paid
d) Don't eat in "Order & Pay" Noodle shops, go to "Pay & Order" takeaways
e) If the court send you an infringement notice, pay it and then ask why
f) Next time you tank up pls take the trouble to visit the cashier, dont just drive off.....

 

[Aaron Sice]

easiet way to bypass LMI is to be a full time employee and ask for no more that 80% lend.

 

[Gentle_Chief]

easiet way to bypass LMI is to be a full time employee and ask for no more that 80% lend.

Yep I thought so.

The only thing with that is it will take a zillion years to a fully funded retirement. To save up 20% on an average 400K purchase one would look at atleast 5 years. And by then the 400K purchase would be sitting at 600K.

 

[Gentle_Chief]

Okay - here is some good news.

Westpac has unconditionally approved the 80% Lend. It came back in a matter of hours after lodging the application.

And no hits to the CRAA file.
Yes that's right, NO new enquiries on the file!

All that Westpac wanted was the Contract of Sale and a letter from the REA to indicate the potential rent.

And heck yeah after battling all week, atleast I am going to have a relaxing weekend!

 

[The Y-man]

Yep I thought so.

The only thing with that is it will take a zillion years to a fully funded retirement. To save up 20% on an average 400K purchase one would look at atleast 5 years. And by then the 400K purchase would be sitting at 600K.

If your serviceability is not the issue, you will be assisted by the fact that as your properties' prices move up, you can draw down extra money from them to 80% of the new value - which can speed up the process.

And if you are earning in the $200's, you can put aside over $100k pa? That's 25% of a property per year right there - that's not too shabby!

The Y-man

 

[RumpledElf]

The only thing with that is it will take a zillion years to a fully funded retirement.

Spare a thought for those of us who get lo-doc 60 loans. 40% deposit ...

 

[Qlds007]

Or should that read used to get lodoc loans of 60% or less.

Anz have withdrawn their PAYG lodoc (Sept 4) and come Jan 1 all lenders are going to change their minimum documentation requirements.

 

[RumpledElf]

Ugh. Our builder had better get our house started by the end of the year then or we're going to have to pay cash for the new house ...

What on earth happens if you get pre-approval for a lo-doc 60 before the changes come in and then the builder stalls for so long we have to get the actual loan under the new system and we get knocked back?

 

[Qlds007]

Hate to say you may have a problem.

All depends on the lender and the extent of the pre-approval.
A nod and a wink and all is good sorta pre-approval means nothing but a full application, CRAA etc etc might just need some updating and go through under the old policy.

Other than that start saving madly.

 

[RumpledElf]

I have the waffliest buyer in the universe vaguely working their way through the purchasing process for one of my houses - he's at the B&P stage now.

If that goes through, I will have a $40-50k block of land and $40-50k cash to put up for this $110k build. $60k is an awfully small loan to have on a $250-300k house so you'd think at least one bank would go for that.

I wonder if pointing this out to our builder will stop them from just going silent for weeks on end until I ring them and ask what's up ... which prompts a big flurry of paperwork as they have clearly forgotten about us. I swear we've lost 2-3 months on this build process just waiting for the builder to contact us until we give up and phone them ...

 

[stevo_c]

on the subject of credit app enquires on your credit file, i am in the middle of getting finance approval through NAB. I have applied through the branch in person first for pre-approval on 250k (bang - 1 hit on my file, ok no worries) found an IP went back into get full approval. Asked whether or not the bank would be hitting my file again, was told no - same app no more credit enquires needed. (bang - second hit on my file for exact amount 210k, not happy but got over it) Received call from a different NAB branch, was a girl in the audit department double checking my bankers app against my known info. Apparently the banker lodged the app incorrectly and left out stuff i gave her. Now as i had her on the phone i thought i would just ask the question "Will you be hitting my credit file again?" "No, thats not our job we just double check paperwork" (bang third hit on my file for exact same amount from her Qld branch - having a bit of trouble getting over this one)

I know i have spoken to Rolf before on this subject, but is this not entirely irresponsible? Im gathering this happens a lot. How to turn this negative into a postive im wondering. I'm suppose to be developing a win win relationship with my banker and i feel like giving em a piece of my mind. I have to play nice until i get the finance through but them i thinking of asking them to contact veda and have that last enquiry removed. Any advice anyone?

 

[Peter_Tersteeg]

Steve it happens all the time. The people who you talk to don't order the file, the system they're putting the info into orders it. They have no control over it and many of them don't even know it happens, they just get a red or green light.

 

[Blacky]

Earlier this year I was approved finance by St George, with some dubious conditions on the loan (construction finance) and they wouldnt approve the loan without them there (despite my protests).
So I tried with the NAB. The loan was declined due to failed CRAA score. They said that I had too many checks on my file. Which I thought was odd, because it was the only loan I had applied for in about 2 years.
NAB refused to provide a copy of my CRAA. So I logged onto Veda to check it out and had 17 credit checks... 9 from St George and 8 from westpac. All for the loan which I was applying for.

In some situations NAB had performed 3 checks in 1 day.

I was suprised that the bank declined the loan based on the CRAA when they were a primary reason for the checks....