NAB now also targetting Yield Investors as HIgh risk

[Rolf Latham]

recent release

Makes portfolio structuring and LENDER knowledge more important than ever


ta
rolf


Rental Income For all applications, the rental income used in the credit assessment must be the lower of:

•the verified rental income
or
•6% of the market value of the property.

 

[Aaron_C]

Was this NAB direct or Homeside or both?

 

[Peter_Tersteeg]

It's a NAB policy, it hasn't reached HomeSide (yet). My HomeSide BDM didn't know anything about it until he started talking to a NAB assessor.

If the property isn't held by NAB, there's a verifyable lease in place and it's not a security property, they may still take the actual lease amount. I'd be very cautious about what property values I put on the asset and liabilities page however.

If you're purchasing a property through NAB, the best they're going to recognise is a 6% yield on that property. Yet another reason why HomeSide is a far superior product than NAB.

 

[Rolf Latham]

Was this NAB direct or Homeside or both?

BOTH

ta
rolf

 

[DaveM]

I like how if you are losing heaps of money a year on an IP then you have "gearing benefits" and they will throw money at you, but if you are cashflow positive and making money you are "rent reliant" and a credit risk.

 

[Aaron_C]

BOTH

ta
rolf

Haven't got the memo yet. Yet another reason not to use Homeside.

 

[Rolf Latham]

Haven't got the memo yet. Yet another reason not to use Homeside.

me neither, but I have reliable sources

Ta

rolf

 

[Peter_Tersteeg]

BOTH

ta
rolf

In that case I need a new BDM at HomeSide.

I imagine it'll flow through to all Advantedge lenders.

 

[Corey Batt]

A kick in the teeth for cash flow properties helping your serviceability numbers.

First AMP, now NAB, it's getting pretty interesting in the policy sphere.

 

[Mick C]

6% pft... that kills 8/10 of all positive /cash flow investors.

 

[Aaron_C]

6% pft... that kills 8/10 of all positive /cash flow investors.

To be fair though, NAB/Homeside has already had a problem with people being too 'rent reliant' so I am not that surprised - although that was originally only for LMI deals.

 

[agent007]

To be fair though, NAB/Homeside has already had a problem with people being too 'rent reliant' so I am not that surprised - although that was originally only for LMI deals.

What's the benefit of being salary/wages reliant? The guarantee is just 1 or 2 months of payment after notice...

 

[HotRod]

What's the benefit of being salary/wages reliant? The guarantee is just 1 or 2 months of payment after notice...

My thinking too.

Rather be rent reliant with lots of properties knowing that a hit in one will hardly have any effect across the entire portfolio, compared to being wage reliant where you could be given two weeks notice and be unemployable and you have no income to support your NGed property portfolio and thus have to go into fire sale mode.

 

[Token Funder]

I presume Genworth's premium increases are also adding to your happy demeanour there Rolf ?

 

[Serendipitous]

recent release

Makes portfolio structuring and LENDER knowledge more important than ever


ta
rolf


Rental Income For all applications, the rental income used in the credit assessment must be the lower of:

•the verified rental income
or
•6% of the market value of the property.

Hi Rolf,

Are there any other lenders (besides AMP that was mentioned in another thread) that have a similar restriction? I do know that ANZ has recently imposed this restriction on me but it uses 10% of market value of the property (which is higher than NAB's 6%).

 

[Peter_Tersteeg]

Hi Rolf,

Are there any other lenders (besides AMP that was mentioned in another thread) that have a similar restriction? I do know that ANZ has recently imposed this restriction on me but it uses 10% of market value of the property (which is higher than NAB's 6%).

ANZ's restriction is on certain mining towns which are considered extremely high risk. It's not a universal one.

I think Westpac also have restrictions on a few postcodes, which they simply won't lend to.

 

[Rolf Latham]

I presume Genworth's premium increases are also adding to your happy demeanour there Rolf ?

Im fine with that, its directly related to specific and quantifiable risk.


I fully understand the concern lenders are having with some "mining" areas since in many areas, the large scale infrastructure investment is slowing, hence employment may come back some substantially as projects go from development to operation, or from operation to mothball.

My beef relates to the Samosa Factory Approach that NAB and AMP have taken. More so NAB, AMP have always been a bit quirky and they are small fry.

What do a Moranbah Investment and Western Sydney Granny have in common from a INCOME risk assessment Point of view ? Grouping them by rent return makes little sense from a risk management POV I would have thought


ta
rolf

 

[beachgurl]

I've had the 'rent reliance' problem raised against me. I think all LMI loans with Genworth where the lender doesn't have it's own DUA are no go zones for me. Loved AMP for their DUA.

Does AMP only have a problem with having more than 10 properties or is rent reliance an issue too regardless of the number of properties owned?

 

[Aaron_C]

Does AMP only have a problem with having more than 10 properties or is rent reliance an issue too regardless of the number of properties owned?

Both now..

 

[willair]

And people ask why i have invested in Banks for many years,i like reading posts like this it gives a investor a glimpse of some unfamilar facts that some bypass..