Portfolio Lending - Xtreme X-Coll!
- Thread starter JIT
- Start date
I just as much agree with the bank not being your friend as I disagree that a bank will not extend extra benefits or better than "policy" treatment to a long term customer and effective negotiator.
There is not one rule for all customers.
Even though there is one rule for 90% of customers.
The reality is that the art of negotiating is just about extinct.
It's delegated to the MB who does'nt negotiate anything, just pulls up the data on the screen and recommends a lender.
The relationship with the MB is no different. Then banks need the business just as much as an MB.
There is not one rule for all customers.
Even though there is one rule for 90% of customers.
The reality is that the art of negotiating is just about extinct.
It's delegated to the MB who does'nt negotiate anything, just pulls up the data on the screen and recommends a lender.
The relationship with the MB is no different. Then banks need the business just as much as an MB.
Hi Rolf,
Can you give us an example of a TAE/TLA for an average client on a certain income etc...
Also, I would be interested in other people's thoughts on this post:
JIT said:
... which Rolf has replied to above...
I would be very much interested in what the brokers here have to say about this...
Are brokers in a position to negotiate much with lenders compared to a borrower negotiating with a lender direct?
Doesn't a lender have to consider the cost of broker commissions on top of any further discounting?
My thought are - try it and see! All the generalisations in the world aren't worth a dime when you're sweating it out looking for finance for the next deal. At the time, you may want to run a backup application with your x-colled lender while you also go for the new one. That way you have a backup plan if and when it all turns to custard and your new lender doesn't deliver on time...
Worked for us anyway!
Recent experience on this point - no problems with serviceability or equity - just with a major lender who couldn't get their act together to come anywhere close to delivering on a 60 day settlement! We needed that backup plan...
No amount of forward planning / strategy etc would have helped us there.
Bing Lee coined " Everything is negotiable", but its actually not so. While you can wangle your way out of some fees and obtain a lower rate etc, this is based on the premise that the lender will actually make an offer of a loan.
Getting back on topic for a moment, either a lender will want your business within a particular framework, or they will not, and in general there is no negotiability in that, especially in the current climate.
There is some latitude for moving goal posts, for example a lender may decline a loan for whatever reason they deem fit, even though the loan fits policy well. Its a brokers job to then see what can then be salvaged.
Some recent cases which also addresses the TAE issue....
1. A lo doc client with a very strong position was knocked back for a loan of 450 at 80 % lvr cash out for a share portfolio, with the reason being that the loan took the borrower to a HIGH TAE. The total lend for that client with that lender was a smidge under 1.1. Policy for that lender, and that client profile at 80 % is 2.5 mill. Now you can argue till the you goblue in the face. The lender will not make that loan unless you reduce their perceived risk. In this case a redn of lvr to 70 % was considered adequate.
2. A full doc client was declined for mortgage insurance because the lender deemed that the client already had way more than her fair share of IO loans. Servicing wasnt an issue, her existing loans were at 80 %, this new purchase was to be at 90 % IO etc . TAE was under amill. The only way we could slide it through was to go back and have th 90 % lend stuctured as PI. This lender has a loophole where after one days settlement you can change the pi toIO with a phone call.
I could go on as could any broker ( or indeed borrower) with a bit of experience. Its everyday stuff in the current climate where policy is made on the fly.
ta
rolf
Getting back on topic for a moment, either a lender will want your business within a particular framework, or they will not, and in general there is no negotiability in that, especially in the current climate.
There is some latitude for moving goal posts, for example a lender may decline a loan for whatever reason they deem fit, even though the loan fits policy well. Its a brokers job to then see what can then be salvaged.
Some recent cases which also addresses the TAE issue....
1. A lo doc client with a very strong position was knocked back for a loan of 450 at 80 % lvr cash out for a share portfolio, with the reason being that the loan took the borrower to a HIGH TAE. The total lend for that client with that lender was a smidge under 1.1. Policy for that lender, and that client profile at 80 % is 2.5 mill. Now you can argue till the you goblue in the face. The lender will not make that loan unless you reduce their perceived risk. In this case a redn of lvr to 70 % was considered adequate.
2. A full doc client was declined for mortgage insurance because the lender deemed that the client already had way more than her fair share of IO loans. Servicing wasnt an issue, her existing loans were at 80 %, this new purchase was to be at 90 % IO etc . TAE was under amill. The only way we could slide it through was to go back and have th 90 % lend stuctured as PI. This lender has a loophole where after one days settlement you can change the pi toIO with a phone call.
I could go on as could any broker ( or indeed borrower) with a bit of experience. Its everyday stuff in the current climate where policy is made on the fly.
ta
rolf
lol. What do you expect brokers to say?
I've been screwed by every major bank.
But I reckon I now been doing this long enough to know their job better than most of them.
Just because bankers have the power to approve up to 20mil loans does'nt mean they can perform miracles. They too have bosses, who also have bosses. Sometimes they can, sometimes they can't.
But they are negotiable, specially if your a long term customer and have a reasonable size business.
This does'nt mean you have to x-coll all your IPs, just that if you think you can state your case good enough, go for it. Walk in and ask for the $$ based on your plan (have at least A&B). You may want to x-coll one Ip you already have with them.
Go in and ask! You have nothing to lose.
Warning! This is not for the faint hearted, if they sense weakness your a debt man laid down & ready.
As for not delivering within 60days, those stories are happening for loans through brokers as well.
And yep it happened to me once, and I sure as hell make the darn most of it by throwing it back in their face at every single time I'm after something.
I just love it when they ask "do you have other loans?" "and who with", cause I give them the answer and tell them exactly why.
Always keep your kool and smile, but now and then you get a smart donkey* who thinks customers should beg. Don't let it bother you, just tell them an MB is one phone call away, smile and wish them a good day as you leave.
As EA Sports says "Challenge Everything"
*people who run this forum obviously have a very poor understanding & grasp of the english language and dunno what this word A double S means. I suggest buying a dictionary. I learned it in primary school, wonder if they went too.
I've been screwed by every major bank.
But I reckon I now been doing this long enough to know their job better than most of them.
Just because bankers have the power to approve up to 20mil loans does'nt mean they can perform miracles. They too have bosses, who also have bosses. Sometimes they can, sometimes they can't.
But they are negotiable, specially if your a long term customer and have a reasonable size business.
This does'nt mean you have to x-coll all your IPs, just that if you think you can state your case good enough, go for it. Walk in and ask for the $$ based on your plan (have at least A&B). You may want to x-coll one Ip you already have with them.
Go in and ask! You have nothing to lose.
Warning! This is not for the faint hearted, if they sense weakness your a debt man laid down & ready.
As for not delivering within 60days, those stories are happening for loans through brokers as well.
And yep it happened to me once, and I sure as hell make the darn most of it by throwing it back in their face at every single time I'm after something.
I just love it when they ask "do you have other loans?" "and who with", cause I give them the answer and tell them exactly why.
Always keep your kool and smile, but now and then you get a smart donkey* who thinks customers should beg. Don't let it bother you, just tell them an MB is one phone call away, smile and wish them a good day as you leave.
As EA Sports says "Challenge Everything"
*people who run this forum obviously have a very poor understanding & grasp of the english language and dunno what this word A double S means. I suggest buying a dictionary. I learned it in primary school, wonder if they went too.
Hi Rolf,
Thanks for the examples.
If the client formally x-colled one or more IP's would that have reduced the lender's perceived risk?
Sounds a bit like my situation late last year!
Thanks for the examples.
If the client formally x-colled one or more IP's would that have reduced the lender's perceived risk?
Sounds a bit like my situation late last year!
Yes, that's what I will consider doing at the time.
Further to discounting and MB's, many banks have a pricing area where large loan amounts can get discounts on rates or fees etc. both staff and MB's have access to this. There is no evidence to suggest Staff loans are any cheaper to originate than MB's loans, so there is no reason why the bank would discriminate when looking at pricing.
A major bank used to do a lot of cross chanel poaching, that is the branch would steal the MB's business after application or prior with offers of further discounts waiving of fees etc. This was finally seen to be a total waste of time and money, imagine one part of a company undercutting another part.
To the questions of TAE, some lenders and LMI's look not only at their own books, but the total amount borrowed by the applicant and decline on that basis. This might have come back as too rent reliant, or overall exposure too great in comparision to level of net assetts or some such on the decline letter.
Having all your properties xcolled just gives them further reason to worry, and makes it harder down the track when you want to vary from the buy and hold strategy, or when you are deemed to have bought once to often already.
A major bank used to do a lot of cross chanel poaching, that is the branch would steal the MB's business after application or prior with offers of further discounts waiving of fees etc. This was finally seen to be a total waste of time and money, imagine one part of a company undercutting another part.
To the questions of TAE, some lenders and LMI's look not only at their own books, but the total amount borrowed by the applicant and decline on that basis. This might have come back as too rent reliant, or overall exposure too great in comparision to level of net assetts or some such on the decline letter.
Having all your properties xcolled just gives them further reason to worry, and makes it harder down the track when you want to vary from the buy and hold strategy, or when you are deemed to have bought once to often already.
i sell my ideas to the bank by saying [x-col (1x CF-) + (1x CF+)] and repeat.
they love it. self perpetuating income stream for me and them.
they love it. self perpetuating income stream for me and them.
no, xcoll in that scenario would offer them absolutely no further comfort, the LVR and the TAE would no change, so the fundamentals of the deal dont.
I cant see any reason would they cosider that any differently ?
Where you MIGHT have some success with that is by crossing you are lowering the LVR, but hey that changes the whole equation which can be replicated in better ways.
ta
rolf
I know of some that do have contacts "upstairs" and use them. Of course I doubt they advertise that fact. Secret squirrels lol, but as long as customers get a better deal, I see no problems with it.
And yes i have witnessed it, cause I did'nt believe it when I had zero servicability.
99% dont. They look at a list of offers on a computer screen from their aggregator or franchisor and say whatever they want next (ethical, competent or not).
From the banks POV they either pay bonuses & comms to their staff of to the brokers.
Who wants to have more employees on their books, put your hand up?
Not that banks, that's for sure.
They are now starting to make their own lending staff franchisees.
Rolf wrote: "Remember, in general with lender loyalty, you are only as good as your last repayment."
Spot on Rolf!
If I understand the xcoll arguments above, then as an individual with plenty of equity in my PPOR and a fair income and seeking to invest in mainstream Residential, then xcoll is just not the way to go. It makes sense to me to have individual control over each investment.
Cheers,
JB
Spot on Rolf!
If I understand the xcoll arguments above, then as an individual with plenty of equity in my PPOR and a fair income and seeking to invest in mainstream Residential, then xcoll is just not the way to go. It makes sense to me to have individual control over each investment.
Cheers,
JB
Bump.
If you have all your loans with one lender but are not x-colled, and you want to access any increase in equity, will that lender have to re-value all of your properties at that time?? At their cost, or yours?
Would that also happen if it's x-colled?
I'm thinking that the more you have with one lender, the more they control the valuation process, in particular, WHEN it is done......
If you have all your loans with one lender but are not x-colled, and you want to access any increase in equity, will that lender have to re-value all of your properties at that time?? At their cost, or yours?
Would that also happen if it's x-colled?
I'm thinking that the more you have with one lender, the more they control the valuation process, in particular, WHEN it is done......
If its xcolled, then yes they will always value (either desktop or full) all the securites the loan is secured against.
If it isnt xcoll, they generally wont value the other properties, unless the assessor wants for some reason to double check your assets and liabilities (which they can ask for even if your not with the same bank). In this case they would usually only ask for a current rates notice rather than a formal val.
Its always at the customers cost, whether through the annual package fee, rolled into the application fee, charged seperately, or negotiated away as part of a discount for loan amount.
If it isnt xcoll, they generally wont value the other properties, unless the assessor wants for some reason to double check your assets and liabilities (which they can ask for even if your not with the same bank). In this case they would usually only ask for a current rates notice rather than a formal val.
Its always at the customers cost, whether through the annual package fee, rolled into the application fee, charged seperately, or negotiated away as part of a discount for loan amount.
Cross collateralising deliberately is crazy. You can do the exact same without crossing and it is much safer.
eg.
2 Properties valued $100,000 each = $200,000
You borrow 90% = $180,000
Run into financial trouble and need to sell one fast. You find a buyer for $100,000 for property A. But to release the security you need to apply. Bank does a valuation on remaining property and it has dropped to $80,000. You will need to reduce the remaining loan to 90% of this = $72,000.
So you sell for $100,000 but need to come up with $108,000 or you can't settle on the sale. This is not including fees or costs. And there would be no money left over to pay for your other financial problems.
But they were separate things would be different.
You just sell property B with no val needed on property A and no playing with loans. You may still have negative equity, but the lender wouldn't realise it!
eg.
2 Properties valued $100,000 each = $200,000
You borrow 90% = $180,000
Run into financial trouble and need to sell one fast. You find a buyer for $100,000 for property A. But to release the security you need to apply. Bank does a valuation on remaining property and it has dropped to $80,000. You will need to reduce the remaining loan to 90% of this = $72,000.
So you sell for $100,000 but need to come up with $108,000 or you can't settle on the sale. This is not including fees or costs. And there would be no money left over to pay for your other financial problems.
But they were separate things would be different.
You just sell property B with no val needed on property A and no playing with loans. You may still have negative equity, but the lender wouldn't realise it!
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