What was the reason you were recommended Macquarie & Citibank?
Macq Bank vs Commbank
- Thread starter cenz
- Start date
What was the reason you were recommended Macquarie & Citibank?
Really depends on the circumstances
On a separate note, how many IPs do you currently have ie - do you NEED the strong serviceability of the Big Mac ?
What was your brief to the broker?
Many brokers dont like the big 4 or any branch based lender because it exposes that loan to being fiddled with at branch level. Its somewhat old school thinking, since the branch "rewrites" for a 5 k top up are now rather discouraged by all the main lenders
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some brokers also dont like not getting trail in year 1 from likes of nab and cba as well.
The counter to this is that the total trail money paid by both NAB and CBA is greater after 3 years than those who do pay from day 1. From year 2 onwards NAB and CBA actually pay more than some of the smaller lenders and the breakeven point is usually after year 3. A broker recommending lenders based on commission is doing a fairly lousy job.
All of the lenders previously mentioned have their place. I have clients with loans through CBA, NAB, Macquarie and 3 or 4 others in their portfolio. They wouldn't be where they are today had they stayed with any one lender.
In fairness to Macquarie and some of the other lenders outside the bit 4, they are very different entities today then they were in 2008. Their funding models are substantially different, their risk appetite is far more conservative, the assessment criteria is more sustainable. I don't believe they represent anywhere near the same risk to borrowers than they did during the GFC.
No doubt they're probably not as strong as Australia's big 4, but lets not kid ourselves; CBA, ANZ, NAB, WPB all gouged borrowers as much as they reasonably could for as long as they could during the GFC and they were never in financial stress. Had they been able to get away with it, the big 4 would have been far nastier to consumers than any of the second and third tier lenders.
They pay the highest comms
Long term, CBA actually pays more than Macquarie & Citibank. There's lenders that pay more again.
I suspect there's either a servicing reason or it's because their rates are cheaper within the scope of this borrowers profile.
If it helps, my case:
This will be my first ever property, but intended for IP instead of PPOR.
I don't think I have an existing credit file because my car was paid in cash and I don't take 'bad' debts.
I am a young working professional and I am between 1 - 2 years into my first job.
I have at least 7 - 8% genuine savings to put into the deposit, but I also borrowed lots of funds from parents to cover other fees and remaining deposit.
Using some sort of spreadsheet shown on broker's computer, it was calculated that I could borrow up to $390k. I am aiming to go for $380k.
This bit concerns me.
The calculators we use make a few assumptions about several things, including your living expenses. In my practical experience, a persons real living expenses are much greater than what's in the banks calculators.
If you're trying to borrow $380k when the calculator says you can only afford $390k, you're probably going to have a very tough time making ends meet, especially given this is your first property purchase.
Unless there's something else generating income for you, I'd strongly recommend you look at alternate options where you purchase a lower value property and borrow less.
Thank you for your concern, but based on my calculations, I actually think bank's estimates are much greater. Or maybe I am used to living a 'tight' life.
Even if I get no tenants forever, I could still cover the mortgage cost based on my current expenses. So I think it should be fairly safe.
Any opinions on Macquarie or Citibank though?
Current expenses have a habit of changing. I've actually lived on the banks serviceability assumptions, it's not a pleasant place to be and you walk a very, very fine line.
You haven't provided remotely near sufficient information to make any sort of assessment. You're welcome to give me or another broker a call if you want a formal second opinion.
Id agree with that !
its usually the poverty line for most westerners.
many cultures manage to live on half of Hendersons............ even in places like Sydney
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I'm not saying the deal can't or shouldn't be done, there could be other mitigating circumstances which chunho01's broker may be aware of, but doesn't fit the calculator. My statements are based on a couple of simple statements which are very limited in scope. There may be other information which might change this opinion though.
Pete.......... have you taken some disclaimer pills
your concern makes 100 % sense
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