New loan & re-financing with NAB

[womble66]

General question/s for a friend as I had no idea (and have no influence)?

He currently has 3 loans with the STG that are in a portfolio loan and he is looking to buy another property with new loan finance from NAB which involves also the refinancing 2 of his existing loans to take advantage of lower rates. He currently has the following:

(Warning: I have a feeling all these are crossed)

IP1 Value $450K Loan $147K
IP2 Value $350K Loan $357K
IP3 Value $300K Loan $36K (LOC now used for personal usage) --> Staying at STG with them releasing the security of the other properties to NAB.

He has asked NAB to finance a new purchase of $380K and refinancing existing IP1 & IP2 loans while leaving the IP3 loan and security with STG. He went direct to NAB (I know!!) and they have said it will work like this:

New IP1 loan $220K ($147K + $73K as deposit for new buy)
New IP2 loan $357K
New IP4 loan $317K (~80%)
(I think again with all properties x-coll)

So the question is to purchase IP4 he will use a deposit from the extra equity in IP1 loan and the new IP4 loan so is this OK and what are the complications for tax? Is it ok that the new IP1 loan is not split to differentiate the old loan and the deposit or should it be a separate loan?

He seems to do things on the spur of the moment and does thing in reverse to what seems logical as he is now looking to see his tax/accountant tomorrow as its all got too complicated for him.

Unfortunately he needs the funds for Saturday and NAB have approved his applications so he feels he now has no options.

 

[Rolf Latham]

Unfortunately he needs the funds for Saturday and NAB have approved his applications so he feels he now has no options.

so dont get in the way?

Reality is that moving from STG to NAB will obviously suit their current circumstances, in their eyes

Its likely a dumb move from a structured lending point of view.................. but with "no time " and a "lacky band approach" dont make it your challenge

ta

rolf

 

[Aaron_C]

I agree it's probably too late....just leave it for now and fix it later. You can always uncross with NAB later..

 

[Rolf Latham]

You can always uncross with NAB later..

That can be an interesting assumption

Never assume that whats possible today, is doable tommorrow - one too many variables beyond borrower control can mean a road block for months or years.

ta
rolf

 

[Aaron_C]

Yes, not the preferred option but that's the best we can do at this stage

 

[Jamie M]

He currently has 3 loans with the STG that are in a portfolio loan and he is looking to buy another property with new loan finance from NAB which involves also the refinancing 2 of his existing loans to take advantage of lower rates. He currently has the following:

Typical NAB - they're ruthless in this respect. As soon as someone walks into a branch and mentions they've got a home loan with another lender - they'll do everything in their power to refinance it.

They'll throw lower rates, cash rebates - you name it.....the end result is a messy structure that gets in the way of their future investing plans and/or costs a lot more in the long run.

Cheers

Jamie

 

[Rolf Latham]

Typical NAB - they're ruthless in this respect. As soon as someone walks into a branch and mentions they've got a home loan with another lender - they'll do everything in their power to refinance it.

its not about THE the loan .


Its about not leaving any business on the table, and NAB are in no way unique in this regard, and many brokers arent immune to the same poor practice.

Many brokers already use Best Interest Principles - one needs to demonstrate that the client is better off after the transaction.

Cost of product is just ONE aspect of that.

The challenge here is that the NAB banker can only act with the knowledge and delegation that they have.

A best Interest outcome from a Global Structuring point of view may be that the borrower should leave 1 with STG and take 2 to CBA............

Given the capacity of the NAB banker, they are liklely acting in the best interests of the client, especially if the brief of the borrower is, get me more money at a better rate.


ta
rolf

 

[Jamie M]

Its about not leaving any business on the table, and NAB are in no way unique in this regard, and many brokers arent immune to the same poor practice.

They're not unique - but they are one of the most aggressive IMO.

I've seen them attempt to refinance fixed loans with high break costs, refuse to release equity if the purchase app isn't via them, etc.

I know a lot of bankers/brokers are guilty of the same - but they seem to take it to another level (from what I've seen).

Cheers

Jamie

 

[Rolf Latham]

They're not unique - but they are one of the most aggressive IMO.

agreed

ta
rolf

 

[Aaron_C]

Must be from NAB's history as a business bank - you gotta be aggressive in that space.

 

[womble66]

so don't get in the way? don't make it your challenge

Cheers Rolf however as stated I cannot or ever want to try to influence his choices. I was only looking to answer the simple question he asked me. Its not my challenge and I am far from in the way but thanks for your advice.

you can always uncross with NAB later

Thanks Aaron but X-coll was not the real point of the Q and my mention of it was my attempt to avoid getting structure advice relating to the security but more about the structure of the loan to access the equity for the new IP.


It seems in my attempt to provide some background I have confused my own intent and that was to provide my friend with a quick response to this question as I don't like providing "stab in the dark: responses:

Is it ok that NAB increased the size of the loan against IP1 (during re-finance) to access equity for the deposit for IP4 rather than split it into 2 loans to differentiate the purpose of the loan? Is there a difference especially in the future should he sell either IP1 or IP4.

Thanks but if its not a relevant question please ignore this post/thread.

Interesting side chat about NAB though.