Non-bank Lenders

[familyman]

My wife & I are hoping to purchase our first PPoR. We're on Centrelink payments, and have (casually) approached Westpac & St George recently - just to get some ballpark amounts, as to the amount/s we qualify to borrow.

The results were pretty pityful (as expected). So we definitely will be using a broker, and will probably require a non-bank lender as well (I assume anyway).

Of course, we want the lowest interest rate we can get, but also don't want the loan restricted with traps, like not being able to pay extra off the loan without penalty. (We expect we'll be able to pay it out in full, in 6-7 years.)

My concern is... What (if anything) prevents non-bank lenders increasing their variable interest rate by unreasonable amounts? (For instance - if the main banks increase by 0.25%, what's stopping the non-bank lender increasing by 2%? And if there is a limit on how much they can increase IRs each time - what prevents them increasing it several times in a row to reach that same result?)

 

[Spectre]

IMO - if its for a PPoR then the bank has a duty to ensure that you're not overcommitted otherwise the mortgage will be set aside.

Not trying to sound tough but trying to get some more info....

But just because they're a non bank lender - if anything they can be tougher than a normal lender half the time.

If you're on pensions, how do you expect to be able to pay it off inside of 6-7 years - noting loan amounts may be low?

 

[Rolf Latham]

Hiya

As Lukey has pointed out, variable rates are just that...........variable.

The ONLY thing that stops one lender being more aggressive than another is foot power, that being competition.

So, if you are exposed to using a particualr lender because they will lend the funds while a group of others will not, then youd need to be prepared for that risk.

Ta
rolf

 

[Jamie_D]

If you're on pensions, how do you expect to be able to pay it off inside of 6-7 years - noting loan amounts may be low?

Could be waiting on a pay out and wipe debt clean once received.....which could take years?

I'd get the advice from a MB who can shop around for you

 

[tobe]

Family Guy has posted before, and the posting kind of degenerated into a moral argument on social security, and banks liability to lend responsibly. I have already commented on that debate. (I earned $120k last year and due to negative gearing I had a taxable income of $30k, which meant I only contributed about $5k to the upkeep of roads schools and social security, and my partner receives FTB A, so who am I to judge?)

To familyguys question, the only practical way to borrow a more meaningful amount of money will be to do a low doc or no doc loan. There are fewer and fewer lenders who write this kind of business, but they are still available, usually at a higher interest rate. Submitting the loan as an investment loan will also help both serviceability and the assessors conscience due to the way the credit code is written.