Order of Lenders

[Freddie Mac]

What are the earning?

PAYG - part-time / full-time / casual

Self Employed - how long in the industry, what were you doing prior

rent?

Earnings - $52k last FY. (Last 13 weeks annualized to $80k. ANZ lent based on this so wife bumped up her hours)

Job - Nurse (through an agency for last 18 months). Shifts 2-3 12 hour shifts per week (is this part-time?) - fluctuates week to week and season to season.

 

[Brady]

Earnings - $52k last FY. (Last 13 weeks annualized to $80k. ANZ lent based on this so wife bumped up her hours)

Job - Nurse (through an agency for last 18 months). Shifts 2-3 12 hour shifts per week (is this part-time?) - fluctuates week to week and season to season.

CBA will do last 3 months salary credit allowing for overtime/allowances/penalty.

Brokers will comment on others.

 

[Peter_Tersteeg]

Quite a few lenders use the annualized figure.

ANZ, AMP, HomeSide, Advantege immediately come to mind but there's plenty more. There may be a few more parameters around the assessment depending on employment type which Brady is alluding too.

If you're relying on this type of information to make a deal work, you probably need more specialised and specific advice. Give one of the brokers from the forum a call.

 

[Colin Rice]

Another factor to consider is projected increase or decreases in income both from PAYG/Self employed sources, and rises/decreases in rental income over the longer term. Also interest rate increases can cause a blockage so will need to be considered in the strategy.

Admitidly they are factors that require some speculation and/or forward projection so not an exact science as Rolf and others have illuded to. Throw in changes to policy it can make it a dynamic ride.

Increased income can unlock equity access in the less generous lenders one may have started the accumulation phase in as the property price increases, that previously you could not access due to failed servicing. Most peoples income, on average will rise over time but not always the case.

Btw was talking with my Macquarie BDM last night at a.bank shindig and learned that debt with them that has been in place for 6+months is serviced at actual repayments as opposed to the normal practice of sensitised repayments as per other lenders.

 

[Redom]

Btw was talking with my Macquarie BDM last night at a.bank shindig and learned that debt with them that has been in place for 6+months is serviced at actual repayments as opposed to the normal practice of sensitised repayments as per other lenders.

I learned the opposite recently! That <6 months they take it at the assessment rate! Can significantly alter the NSCR. I'm not sure I see the rationale - 6 months seems arbitrary.

Macq aren't the only one that take actual repayments for servicing - few others do it too. But it is one of the key parts of their calcs that make them a lender to use later in the accumulation phase.

 

[Colin Rice]

I learned the opposite recently! That <6 months they take it at the assessment rate! Can significantly alter the NSCR. I'm not sure I see the rationale - 6 months seems arbitrary.

Macq aren't the only one that take actual repayments for servicing - few others do it too. But it is one of the key parts of their calcs that make them a lender to use later in the accumulation phase.

I was surprised at his comment in regards to debt with Mac Bank 6 months + at actual repayments. Could have been the beers talking?

I realise Macq are not the only one (can think of 6 others of the top of my bald head) that service OFI debt at actual but was not referring to that.

Cheers.

 

[Redom]

Haha don't think its the beers, pretty sure that's their policy.

 

[Corey Batt]

Macquarie looks at <6 months at servicing rate, post 6 months at actual.

 

[Freddie Mac]

Thanks for the replies guys. This specialized knowledge goes to show that it's worth using a broker.

 

[Mick C]

One of the reason why i like to use Macq for PPOR refinance were we can progressively draw down on the equity every 6-12 month without affecting the serving. Homeside also on a CASE BY CASE ( which is a pain in the ***) will allow exiting homeside/nab debt to be serviced at actual repayment for LVr under 80%.

 

[Colin Rice]

One of the reason why i like to use Macq for PPOR refinance were we can progressively draw down on the equity every 6-12 month without affecting the serving. Homeside also on a CASE BY CASE ( which is a pain in the ***) will allow exiting homeside/nab debt to be serviced at actual repayment for LVr under 80%.

"Case by case" isnt that bank speak for no, ha ha!

 

[Mick C]

"Case by case" isnt that bank speak for no, ha ha!

Hahah normally yes...ie BDM/sales person's talk for " Please submit anyway"

But on a serious note so far i have had homeside accept their own existing debt at actual repayments; all 80% Loans and not a cash out ie 2nd purchase.

 

[Peter_Tersteeg]

But on a serious note so far i have had homeside accept their own existing debt at actual repayments; all 80% Loans and not a cash out ie 2nd purchase.

Never had a problem with HomeSide accepting their own debt at actual repayments if the LVR is 80% or lower.

At 80% they'll make all sorts of interesting exceptions.

 

[Shahin_Afarin]

They should take benchmark on NAB existing debt regardless of LVR but have flexibility around this depending on the strength of the application.

 

[Colin Rice]

On another note anyone had success in an LMI waiver with Homeside for Corporate Lawyers?

 

[Shahin_Afarin]

On another note anyone had success in an LMI waiver with Homeside for Corporate Lawyers?

No I think St George and Westpac are the only ones.

 

[C Stewart]

I have read in other posts that when building a portfolio of IPs, you should start with the least generous lender (more criteria) so that you can utilise the more generous lenders later on when it might be harder to get finance due to issues such as serviceability, loan amount reached a limit with one lender.

As others have mentioned, this really depends on what your plan is, but its the sought of thing your mortgage broker should be able to help you with. Redom helped me through this issue for my long term plan to have a portfolio of IPs. So definitely have a chat to your broker!

 

[Colin Rice]

As others have mentioned, this really depends on what your plan is, but its the sought of thing your mortgage broker should be able to help you with. Redom helped me through this issue for my long term plan to have a portfolio of IPs. So definitely have a chat to your broker!

I have had 4 brokers mentor me over the years and never once was order of lenders mentioned.

I either lucked out or not many brokers "dig that deep". I suspect the latter as theres a big difference between a transactional broker and a strategic broker.

You need to speak to a broker who specialises in IP finance structuring and a good litimus test would be to ask "why do you recomend that particular lender" or "which lender do we use first, second, third etc. and why"? .....and listen carefully to the explanation.

There is no set list but principals apply depending on your goals and objectives.

 

[C Stewart]

Good point Colin, I suspect your right about the differences between a 'transactional' and 'strategic' broker.

Having a broker that is prepared to dig a bit deeper has certainly brought me some comfort about why I should finance particular deals in a certain way so it fits into my overall plan.

But I guess if you just looking for someone to get a deal through there are brokers that specialise in that too, so maybe its just horses for courses.

 

[Greg Reid]

Colin,
I am in a sub aggregation group - mainly for PD additional hours, but I have not heard of any of them talking about order of lenders. All are transactional brokers, market generally first home owners, they all say they do investment properties but usually just one IP, they all tend to use just one or two lenders, either because that is who they used to work for and understand the processes or are a volume rewarded broker with the lender.

I worked in out as I was an investor before I started in this field as a mortgage broker and soon realised to build a property portfolio, first you had to qualify to borrow and you then needed to purchase an IP with the characteristics that would enable you to borrow again. I learnt from experience the unmentioned credit limits applied by lenders to individual borrowers.

In addition to the questions you suggest to ask, also find out how many IP's they have and how are they held. This will give you an idea of how serious they are in this business or that they are just a disinterested 'banker' giving lip service. My view is that to build a successful property portfolio, you need to understand both sides of the transaction, first the asset itself, what type of IP in relation to purchase price (relates to own funds to settle and what you can borrow), to capital growth prospects (for future revalue and refinance strategy) and to rent yield (serviceability) and secondly the finance equation, who to use to borrow, what LVR works best and which lender in what order.