Sequence of lenders

M

miximitosis

Hi guys,

Just curious what the general consensus is for lender sequencing for investors. I understand every scenario is different but say for example a non complex scenario where a person on $100k/yearly salary is looking to build as large a portfolio they can of generic residential properties - what would your general go to order be at a guess?

Eg

Lender 1
CBA or westpac

Lender 2
ANZ or St George

......

.....

Lender X
NAB or Macquarie.


Cheers

Anthony.
 
Those are reasonable generalities

but there is lots of fuzzy logic around there with client specifics, lmi involvement, security, intent of borrower, income types blah blah

With sufficient direct experience or that of a mentor or mentor group its simple, but its NOT obvious thats for sure.

Dont try this at home without appropriate global view advice, especially so if "advising" someone else - it can go bad pretty quickly.

PS, if it were truly and reliable mappable as a specific business process, someone like NAB would have already worked it out having spent 30 mill on their Podium puppy. Having said that, I do know some independent groups that have similar already.

ta
rolf
 
Main question is why ordering of lenders matters and how it helps to achieve a larger portfolio.

A large part of it is how lenders treat other financial institution debt. The latter treat it at actual repayments, rather than some assessed rate that has a buffer inserted.

The earlier lenders tend to include a buffer. Some of those buffers are very restrictive and tend to rule out lenders for serious investors altogether (e.g. ING at 8%).

Cheers,
Redom
 
It's definitely not as simple as go from least generous to most. If you do that you'll find yourself unable to proceed or with a costly refinance in your future. Costly could mean money, but it could also mean opportunity or strategy.

As generalities, NAB and Macquarie are good to leave until later, but not always. Like all lenders, they have their quirks which will affect some people sooner than others. For example if you've got some high yielding properties, you may find that NAB doesn't work so well later on due to some of their policies.

The best solution is likely to be tailored to the individual. Given that lenders policies, peoples plans actions and circumstances do change over time, a plan created today probably isn't going to work 100%. It needs to be planned and constantly reviewed.
 
As others have said, it is not an immediate one solution fits all.
For most the first decision as to equity release is critical as is the strategy, is it a buy and hold or develop/renovate etc?

From my part, a 100% on the PPOR with unlimited cash out/LOC at a decent rate is the start. Someone like Suncorp can work here. The lenders who buffer OFI debt include ING and ANZ, so they are often 1st and sometimes 2nd IP lenders, after that it comes down to LVR's, locations, income policy, etc.

NAB Broker and Macquarie often service well as does AMP with the 100% rental income on <80% LVR -ve geared IP's. Mortgage managers can often have a higher borrowing limit as well depending on the product.

My advice is see a good broker who specialises in the investment property area.
 
Rolf Latham said:
PS, if it were truly and reliable mappable as a specific business process, someone like NAB would have already worked it out having spent 30 mill on their Podium puppy.
Click to expand...

Did they spend $30m on that!

I don't think I've ever ran a scenario on it :eek:

Cheers

Jamie
 
Peter, I agree with you, it is not designed for property investor financing.
It was rolled out far too early and the distaste still remains.
While they have done extensive modifications to attempt to make it more user friendly, it is a more a compliance tool than a help for business.

Calculating borrowing capacity is a key to our business and for many lenders, Podium just do not even come close to what the individual lender servicing calculator shows, which defeats the purpose to a large extent. That said, some of the lender calculators are not what the lenders credit teams use anyway so I often feel behind the 8 ball on some lenders. I really hate putting in a loan application only for it to fail on the lender credit team servicing calculator which is different to what they provide to brokers.

While Podium is not close to perfect, I wish lenders would take some responsibility for our channel. Are any of the other aggregator systems better?
 
Greg I have third party software that's independent of any aggregator. It's not perfect, but it's better modelling various investor scenarios than anything else I've seen.
 
Peter_Tersteeg said:
Greg I have third party software that's independent of any aggregator. It's not perfect, but it's better modelling various investor scenarios than anything else I've seen.
Click to expand...

Same - I'm using both Podium and the third party program Pete mentioned.

At the end of the day - I think the best "long term" scenario planning is usually lots of spreadsheets (both my own and the lenders calcs), knowing lender policy and general experience.

Cheers

Jamie
 
Last edited:
The best calculator is lots of experience, some grey matter , fluffy questions for clients to contemplate and the use of the lenders own systems

Ta

Rolf
 
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