Quote:
Originally Posted by Kesse View Post
FWIW I contacted my banker at ANZ regarding borrowing for an NRAS property and she advised (after contacting the lending team) that "ANZ does not have a position on NRAS". After asking her to clarify further, as I was reading it both ways, she said that the property doesn't matter if it's NRAS or not and can borrow 95% as well.
I'm still very skeptical though, if I were to get an NRAS property with ANZ at 95% LVR whether it would go through without a hitch or not is another matter entirely.
Kesse/Rolf - I dont believe ANZ will do a 95% investment loan for NRAS either. You are right to be cynical.
More generally, I had kind of hoped I'd addressed the NRAS finance side of things pretty comprehensively previously, but maybe not...it seems people want to continue to try to push the envelope with an ANZ or a Mortgage House at high LVR's etc
So, for most mere mortals the reality is this; any NRAS purchase is an investment purchase, requiring an investment loan. Getting an investment loan approved at 95% is quite a feat, whether its for an NRAS approved property or not. When you add NRAS to the equation, things get more difficult, because options become more limited (pretty much non existent to be fair)
To explain - there are TWO generic mortgage insurers in Australia who almost every bank uses for LMI - QBE and Genworth.;
QBE does NOT yet insure NRAS deals (in spite of what some here may tell you)
Genworth DOES insure NRAS deals- for select NRAS models to 90% plus LMI.
The only other Mortgage Insurers in Australia who insure NRAS are "in-house" insurers owned by Westpac and St George, and their policy is clear;
85% plus LMI. with all NRAS deals above 70% to be Mortgage Insured.
So, there is no official policy anywhere, with any lender or any mortgage insurer in the land, which supports 95% NRAS lending. Onyx says they have a 95% product for NRAS , but its limited to them and specific to only some NRAS models. We've no details on the policy or the product provider so its not broadly available. But they are marketing it, so let's wait and see how it goes before making any assessment on whether or not its a viable option for most investors. For the moment it cant be included as an option for the investor public, because its not available unless you buy your NRAS property from Onyx. Im sure Onyx would also concede that a 95% policy is quite different to a 95% loan approval.
What this all ultimately means is that 95% NRAS lending is basically not available to the mere mortals amongst us. Even 90% lending is pretty close to impossible. Genworth may offer an LMI policy to 90%, but Westpac, St George rams and Firstmac dont offer a product to that LVR, so the policy isnt really used - unless a deal is done by exception.
The only way to get a high LVR NRAS loan done by exception is if you are one hell of a strong candidate, with a very significant borrowing capacity, or get lucky and have a bank and insurer approve it by fluke.
When all is said and done - trawling around for high LVR loans for NRAS is like looking for a needle in a haystack- and why on earth would anyone want to take the risk of using a lender that doesnt have an NRAS policy, anyway? Is it just to get access to 90 or 95% LVR? If an investor cant afford a 15-20% deposit, NRAS is not for them. Someone with limited equity is better off buying a non NRAS investment instead, where a 10% deposit will suffice.
So at the risk of being a broken record
These are the lenders who have clear policies on NRAS, understand how it works, and understand the different NRAS models. It should be pretty simple- use these lenders if you need finance for NRAS.
Westpac - they have announced significant changes on March 14th. They now fund a wider range of NRAS models (exactly in line with St George)
QAHC
Brisbane Housing
Yaran
AMC
Questus
Aspire
Max LVR 85% plus LMI. All deals above 70% require LMI. This will add costs to your loan (assuming you capitalise it) otherwise it will just add additional costs to you if you pay it up front.
They assess whatever the NRAS rent is x 75%. This is below average but OK
They assess all existing debt at the actual existing repayments- no loading. This is excellent
NRAS incentive cannot be used for servicing. This is weak
Borrowing capacity is "good " but will get much weaker with each additional NRAS purchase or other investment property purchases in the future, because of how they treat rental income and fail to treat the incentive.
St George - exactly the same models and LVR as Westpac except-.
They assess the NRAS rental x 80%. - slightly better than Westpac. This is good
They assess all existing debt at 9.60%, P&I over 25 years - this is very very weak and hurts your borrowing capacity quite a bit if you have other debts- whether they are P & I or I/O. All of it is assessed as P & I @ 9.6%!!
NRAS incentive cannot be used for servicing - this is weak
Borrowing capacity is extremely challenging/weak -especially for multiple NRAS purchases now or in the future
Rams - see Westpac policy.
Firstmac - funds a slightly different range of NRAS models. They do the following models to 80% LVR;
QAHC
Questus
UAHA
Ethan Affordable Housing
Quantum
Aspire
AMC
Max LVR 80%
No LMI - except on construction loans -and they pay the LMI on those deals anyway. Good
They assess NRAS rental x 80% - slightly better than Westpac. Same as St George. Good
They assess all existing debt at actual rate - same as Westpac. tronger than St G Excellent
They accept 100% of the NRAS incentive for servicing- except on construction . they are the only lender who does this - provides a huge boost to borrowing capacity for all non construction deals. Excellent for anyone considering multiple NRAS purchases now or in the future. Your borrowing capacity grows with your portfolio.
Higher rate - 7.45% vs 7.11% from the others (assuming the loan is above 250K and you are paying a professional package fee).
There are a handful of other lenders who also do NRAS deal on some NRAS models- such as NAB, Bendigo Adelaide, MECU and Wide Bay. However, their policies are limited to one or two models, and LVR and servicing can be restrictive. The lenders outlined above are the main players in NRAS lending.
As Ive said in previous posts - if LVR is important to you because you dont have a 20% deposit - try Westpac or St George. They will do 85% plus cap LMI. But understand that their borrowing capacity is restrictive, (St George in particular is very restrictive) so repeat NRAS purchases, or other future investment purchases, will be restricted by their servicing model. Your future borrowing capacity will be compromised.
If a 20% deposit is not an issue, and you have plans to buy additional NRAS or other investment properties in the next few years, Firstmac's borrowing capacity will be a much better match. No LMI, and your future borrowing capacity can grow with your portfolio.
It all comes down to what you want to achieve.
