Not allowed re-finance to have equity as cash

Discussion in 'Property Finance' started by kanad, 5th Oct, 2010.

  1. kanad

    kanad Member

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    I have a PPOR bought at 390k and now valued at 440K. I have outstanding loan of 320k. I was thinking of fixing a part of it and at the same time refinance to get some equity and put it in the offset account for future investments. 80% of 440k is 352k so I should be be able to get 32k. But the lender (a CU) is allowing me to split but saying that they cannot give me the equity as a cash. If in future I buy an investment prop then I can cross-securitise that prop against the equity.
    Can they do this, i.e. not release the equity as cash for me to do what I wish.
     
  2. marg4000

    marg4000 Member

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    The short answer is that they can do as they want.
    Marg
     
  3. Spectre

    Spectre Member

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    They might but other lenders won't be as tight
     
  4. kanad

    kanad Member

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    Unfortunately I am stuck with a 3 yr initialperiod (1.5 yr into it) when there is a break fee. So can't re-finance with another lender. Thinking of getting a 2 yr FI loan and then re-finance with another lender. Bit disappointed with the CU although their var rate was decent when I took the loan.
     
  5. Rolf Latham

    Rolf Latham Member

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    Hi kan

    Get a commsec account, buy some xyz one day, sell em the next.

    yes, its a cost.........but if it works for u to get inot ur next investment now, then that cost is likley small compared to the oppportunity cost

    ta
    rolf
     
  6. Bradsdad

    Bradsdad Mortgage Broker

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    I guess you need to weigh up the break cost to any savings that could be made from refinancing along with being able to move forward in the future (including structuring of debt).


    Regards
    Steve
     
  7. Sunfish

    Sunfish Member

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    I'm doing a refi and the MB wasn't the least bit interested in any liquid assets I have (but CCs are considered fully drawn). If they haven't got a lien on it, it's of no interest to them. Your bank's reluctance to give a cash-out looks consistent with this approach.
     
  8. Rolf Latham

    Rolf Latham Member

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    depends if that was decent red :)

    Seriously, any form of cash or paper asset boosts the SP and credit score and should not be excluded

    ta
    rolf
     
  9. Sunfish

    Sunfish Member

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    It doesn't matter because I have plenty of equity in the deal. The bit about the CCs is tough though because I have cash in the bank, enough to clear them even if they were fully drawn down. They are paid in full every month but my serviceability is reduced by the theoretical minimum monthly payments and it is serviceability that is my problem, being retired.

    I'll cancel Mrs Fish's and halve the limit on mine. Maybe get an Amex for her or a debit card.
     
  10. tobe

    tobe Mortgage Broker

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    Amex are worse, debit cards are fine.

    The thinking is you could spend all your liquid assetts and run up the full credit limit tomorrow, so they need to include the minimum payment on the full limit.

    there used to be some lenders who would discount the limit if you could proove you were part of the 25% of card users who regularly pay their balance in full every month, by supplying 3 statements thus, but alas, no longer.

    Amex has no limit, but is a liability, I think most lenders treat it as a 10k limit for servicability....
     
  11. RumpledElf

    RumpledElf all fun in the big city!

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    I just spent literally the whole day on the phone/fax trying to get equity as cash - and that was just trying to work out which FORMS to send the bank, I still have no idea if they'll actually give me the money! :eek:

    Good luck anyway, you might need it.
     
  12. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    Interesting I have never included amex cards as a liability for my clients when apply for home / investment loans as the balance spent is due in full by the following month, so therefore I never considered them a credit facility. That said I can see why lenders would consider them a liability.... Responsible lending rules come to mind, another mindfield to tippy toe through!!
     
  13. tobe

    tobe Mortgage Broker

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    As did I until pulled up by a CBA assessor one day.....

    It may have just been a one off, its hard to get definative policy on stuff these days. But having a new credit hit to Amex just as your about to do a new application is probably best avoided.
     
  14. --(< PJ >)--

    --(< PJ >)-- Member

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    Hi Kanad,
    I tried this with one of the big banks recently - Line of Credit. In short, yes... it seems that they know that they can do what they bloody well like. And take as long as they like. And change their policy on LVR etc at the drop of a hat. :mad: And they want specifics about what you want the money for. etc etc. It's your equity, but it's their security. And they're not keen to give out cash right now (unless it's a credit card - charming).
    I wish I'd set up my loans with different lenders, maybe this could increase the options.
    I hope you have better luck Kanad!
    PJ
     
  15. Rolf Latham

    Rolf Latham Member

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    Hi PJ

    Comes down to a few things

    1. Compliance with the Money Laundering and Anti Terrorism acts
    2. The Banks Idealogy on "Split Banking"
    3. An unused Redraw or LOC facility that needs to be open, costs most lenders money...............and we cant have that :)

    ta
    rolf
     
  16. RumpledElf

    RumpledElf all fun in the big city!

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    Do small mortgages cost them money too? The CBA seems very keen to discharge my smaller mortgage. Every time someone rings up and says "so, you want to discharge your mortgage then" I have to explain AGAIN that no, I'd like to keep it thankyouverymuch.
     
  17. Rolf Latham

    Rolf Latham Member

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    Not to my understanding ELF

    Certainly the production cost is a big % cost for a little loan ( for lenders and brokers (that have a buisness) alike.

    What u are getting from ur lender is an area that doesnt want to do the sub work.

    Took us 2 weeks plus to do a simple sub...........with an LVR of less than 22 %, insisted on doing a full val.........

    ta
    rolf
     
  18. RumpledElf

    RumpledElf all fun in the big city!

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    Heh, sounds right. Looks like we're going to get a full valuation too, but the place needs it ... last time a valuer came out the house was an utterly uninhabitable smoking wreck and we had to tell the valuer to watch out for the holes in the floor. $25k of renos and a subdivision later its about time for a reval :)