IO has kicked over to P&I

[jesskaye101]

This has happened in the past 2 years on 2 of our loans. Recently it has happened to a third loan and we've got another 2 to kick over later this year.
We have tried (for the third time) to refinance back to IO with the same lender and with a different lender to NO AVAIL.
Our incomes are higher.
Our rents have increased.
But...
Valuations of properties have come in lower (originally financed to 80% LVR) and we're stuck.
It translates to about an extra $2k per month in serviceability for us.
With hindsight we should have done IO for 10 years OR set loans up as LOC.

 

[twobobsworth]

What does your broker say?

 

[delfredo]

This has happened in the past 2 years on 2 of our loans. Recently it has happened to a third loan and we've got another 2 to kick over later this year.
We have tried (for the third time) to refinance back to IO with the same lender and with a different lender to NO AVAIL.
Our incomes are higher.
Our rents have increased.
But...
Valuations of properties have come in lower (originally financed to 80% LVR) and we're stuck.
It translates to about an extra $2k per month in serviceability for us.
With hindsight we should have done IO for 10 years OR set loans up as LOC.

Did you have 10 year IO option previously? I know that nab offers only 5 years and CBA offers up to 15 years for investors.

 

[jesskaye101]

My broker is an ex-NAB employee, in her own way probably too conservative for what we were attempting to do 3/4 years ago... That is build up our portfolio. She's tried 3 times now, but we're caught with the downward slide in property prices. Ironically, we've actually PAID DOWN quite a sum from 2 years ago and still can not satisfy the collateral requirements of the bank.

I didn't honestly think too hard when we were first applying for loans. 5 years IO seemed fine, as we could always "refinance" when the time came. But I think we fixed for 3 years and when it came off the fixed period it converted to P&I and that's when all the hassles started.

If I knew then what I know now !! It's translated into a $24k minus cashflow mistake for us annually.

 

[Spectre]

If its nab?

we're doing a few resets for clients there and they're not revaluing anything, just reassessing income to support the debt. NABs already stuck with the debt.

The problem with NAB is they qualify their own lending at 9% including resets when reality is 2% cheaper

Also need to determine if its nab or homeside, and maybe get another set of eyes to look at the deal for you.

 

[Rolf Latham]

like lukey said, really need some more data to be able to help

For a moment there I thought ur lender was ANZ who want a full loan app to see if you qualify to pay extra on ur loan !

ta
rolf

 

[Mick C]

This has happened in the past 2 years on 2 of our loans. Recently it has happened to a third loan and we've got another 2 to kick over later this year.
We have tried (for the third time) to refinance back to IO with the same lender and with a different lender to NO AVAIL.
Our incomes are higher.
Our rents have increased.
But...
Valuations of properties have come in lower (originally financed to 80% LVR) and we're stuck.
It translates to about an extra $2k per month in serviceability for us.
With hindsight we should have done IO for 10 years OR set loans up as LOC.

I'm taking a wide stab here, but are the properties are in WA? ( based on your location status)... a few banks dont like extend your IO once it's over for WA and SA properties, i guess in their mind set the property market isn't as strong as another states ( it suck i know...).

Our firm had this same problem a few times...it came down to 3 solution really if the client was determine about rolling the IO again.

1. Depending how strong your serviceability and financial are; it can be escalated to the credit manager for approval

2. Take the loan to a Local/state bank- there are a few WA state banks. - they tend to understand the market for WA a lot better then the national banks...

3. Refin to a LOC + with an offset account.

Regards
Michael

 

[Bigtone]

For a moment there I thought ur lender was ANZ who want a full loan app to see if you qualify to pay extra on ur loan !

ta
rolf

yes great logic there, "we don't think u can afford the lower repayments on interest only so u have to pay the higher amount"

 

[jesskaye101]

Sorry, haven't made myself very clear.
The loans in question are with the ANZ. We actually have 3 loans with them secured against 2 properties which are cross collaterised (I know !!!)
First one original loan $385k, valuation on this property came in at $445k last week (previously valued at $500kin 2008 ), loan is now at $375k
Second one $276k, valuation came in at $325k (was valued at $400k in 2008!!) We've paid this down to $267k
Third loan is $65k and this is still fixed at IO
We're on the ANZ pro pack
I'm so angry, especially with the valuation on $445k, its a 4x2 in Hamilton Hill built by us in 2004. There's a vacant block of land next to it currently under offer which was for sale $299-319k. I am arguing that valuation with the valuer but he's not replying to my emails.
The second lender is Macquarie, we're waiting to hear if the valuations will be enough to kick it back over to IO
We actually do'nt have any loans with the NAB, I meant to just say my broker was originally a 30 year employee with NAB.

 

[jesskaye101]

To give you the complete picture. The macquarie loans relate to another 2 investment properties as follows:
$360k (valuation was $450k in 2008) this is IO
$352k (valuation was $500k) this kicked over to P&I last month
$43k (cross collaterised against above 2 properties - this was all done by our broker and again, with hindsight, if only i knew what i know now !!) this is IO
Waiting to see what the valuations on these properties will be currently

Also we have our PPOR with Westpac and that is IO until 2013.

I tried a new broker with most recent attempt to refinance the ANZ stuff. We tried this time with Bankwest and came back conditionally approved subject to the valuations..which is where we fell flat.

We do have some padding in our PPOR but the thought of refinancing all 5 properties across one lender is probably not viable option for us at this stage. I'm starting to think though that I have to get more assertive and not take "no" for an answer.

 

[Mick C]

To give you the complete picture. The macquarie loans relate to another 2 investment properties as follows:
$360k (valuation was $450k in 2008) this is IO
$352k (valuation was $500k) this kicked over to P&I last month
$43k (cross collaterised against above 2 properties - this was all done by our broker and again, with hindsight, if only i knew what i know now !!) this is IO
Waiting to see what the valuations on these properties will be currently

Also we have our PPOR with Westpac and that is IO until 2013.

I tried a new broker with most recent attempt to refinance the ANZ stuff. We tried this time with Bankwest and came back conditionally approved subject to the valuations..which is where we fell flat.

We do have some padding in our PPOR but the thought of refinancing all 5 properties across one lender is probably not viable option for us at this stage. I'm starting to think though that I have to get more assertive and not take "no" for an answer.

Without looking at your file, i may be wrong here - so feel free to correct...
From what im reading, it's not the IO thats the problem it's more your Valuation/LVR and in affect the LMI that may be payable?

Even if you did refinance 1-2 loan over to a different bank, IO is acceptable, so i dont see the real problem there? unless your more concern about LMI.

Since property 2 has an LVR of 70%, you could easily obtain the extra 10-15% equity and transfer this to property 3...avoiding cross collateralizing, some LMI may be payable, more flexible and dont need to reply on each another.

jesskaye101- As i said i could be missing the point here; so feel free to correct.

Regards
Michael

 

[Rolf Latham]

Hiya

I know the horse may have bolted..............

In addition to the Common sense stuff that Mick has mentioned Id be going fwd with 2 things

1. Get a copy of your credit file from someone like www.mycreditfile.com.au
2. Use lenders where u can get a val BEFORE appln so u dont fry your file
3. Take a structured approach to what u are doing here, and take control. I can see thats what u are looking to do so good stuff !

ta
rolf

 

[jesskaye101]

Michael, where I guess we're caught with the LVR's is the THIRD loan.

So with ANZ, we have x3 loans $375K + $267k + $65k = 707k borrowings.

Current valuations came in at $445k + $325k (massive drop from previous financing !!) = $770k (last time we financed this figure was $900k !!!!)

So the LVR stands at 91.81% and Bankwest will only go to 90% and yes, we'd have to pay LMI.

I am currently waiting on the valuations on the other 2 investment properties with Macquarie and am now thinking would be prudent to refinance all 5 properties...PPOR (current loan $790k and I expect value to be $1,050,000 as it is 3 years old double storey home but on busy road, we live in Floreat, more affluent suburb). I'm going to check with my broker - hopefully she ordered the valuations PRIOR to getting conditional approval with Bankwest - I just assumed she had. But...to be careful to ensure they are not cross collaterised. I've not wanted to do this because I didn't think having everything (over $2m lending) with one bank was wise, but if we can get over the line without LMI then this might be viable. Am going to have a chat with my local NAB today.

Thanks for everyone's input....we're getting there. I just wish I HAD KNOWN this before we financed last time, I would have gone about it much more wisely. Can't blame my broker because ultimately we have to be responsible for our own money/portfolios.

 

[Rolf Latham]

Hiya

Pls dont take it the wrong way, but I still reckon youd be served by taking a BIG breath and seeing how you can best approach what you are doing in a strucured way.

If u currently have stuff with NAB, then I understand why youd want to go that way. But if you havent, you are venturing somewehere that may get u into more issues than you have already.

Maybe NAB should be reserved for your last property, or used for your 3rd etc.

But in isolation, and leaving your broker to one side here ( I could be reading it wrong) the broker doing one thing and You and the nab doing another usually ends in tears, especially when your credit file is already busy, and now needing 90 %, credit scoring may kill you.


ta
rolf

 

[Mick C]

Yep- work with your broker and make sure he/she understand what you want to achieve, and what options are avl.

Regards
Michael