serviceabilty??? I think the bank is wrong



From: Fernando Loprete

Today i spoke to my loans manager and the question about serviceability came up. I currently have 4 ip's with this particular lender and am looking to lock in loans for five years. I wish to drawn down on the extra equity on the properties but they think that i might have a serviceability problem. The properties will produce a gross positive weekly cash flow of $132 after fixing the loans and none of my wages are used for other financial commitments. I can't see a serviceability problem. Has anyone experiance this problem that can offer me some help? Your thoughts and comments will be greatly appreciated. Thank you
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Reply: 1
From: Sim' Hampel

You've probably hit the "too rent reliant" clause... I suggest you speak to a good mortgage broker who can look at your situation and explain to you how each lender works out servicability - and hopefully find one that will help you get your next IP.

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Reply: 2
From: Victor Mann

which bank are u with? there are others that will deal with u as a property invstor.

Victor( the broker) Mann

Good hunting!!!!!!!!!!
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Reply: 3
From: Rolf Latham

Hi Fernando

An all too common problem.

No knowing the full breakdown of your current situation it is difficult to assess what the cause may be.

If you have a small wage then it is possible that "too much" of your income is coming from rent.

Some lenders do not want exposure exceeding
500 k where there are high LVRs involved etc etc.

If it is difficutl for you to get all 4 across the line then either move ALL your business to another lender as recommended by an independent broker - or if exit costs are too high, leave 3 and move a fourth.

This is all assuming of course that your properties are not cross-collateralised in which case you need emergency room help quickly.


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Reply: 3.1
From: Rixter ®

Hi Rolf,

Can you please describe your defintion of "Cross collateralisation"

Happy Investing,
Rixter :)
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Reply: 3.1.1
From: Rolf Latham

Hi Ric

Where you have more than one property, instead of you paying a deposit for a loan on an IP, the bank takes a "collateral" mortgage - usually second mortgage on your first property.

This usually results in greatly reduced flexibility and an excess of security for the lender.

The opposite of cross collateralisation is I suppose "Stand alone securities" or self secured, that is all your IPs finance structures are separate little silos, and there is no link between them or your home. In this way you can choose your lender and restrict the level of security the lender holds over you, AND removes all their leverage to TIE you up.


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