Westpac Re-Finance

Hi All,

I recently applied for a re-finance through westpac to access equity to finance a new investment property purchase.

Property: 1 bedroom apartment in Elwood, Melbourne
Value: 330000
Loan: 257600

We were trying to apply for a 90% lend to access 39400 equity for the purchase of a new investment.

Westpac declined as the mortgage insurer would not increase my LVR which is sitting at roughly 80%. They would also not disclose the valuation figure which when I was talking to the valuer would be around my conservative valuation.

The reason was because the property was 46m^2 and was not over 50m^2 even though they have used it as security before. My Mortgage Broker said there is nothing that he can do as other lenders will see it the same way. And will only re-finance to a high LVR if you are a current customer.

Any suggestions?

My thoughts at the moment are:
1. I can only sell to access equity
2. Wait until lending restriction ease. (length of time unknown)

Regards,
Peter
 
Terry think the Dragon has recently changed and wont take anything under
50 Sq M.

They used to be the king of the 25 Sq M +.
 
Thanks Richard.

Its not easy getting finance these days unless you are a standard client buying with a standard income a standard property in a standard suburb.........
 
Unfortuantely your broker might not be able to get answers for you. Mortgage insurers have been known to decline applications because, 'it doesn't meet credit scoring standards'.

When asked what the credit credit scoring criteria are, the refuse to disclose this information. Westpac are difficult to get an appeal through either.

St George are likely to have similar standards as are many lenders. Whilst Westpac insure internally, it's ultimately underwritten by Genworth.

It's a tough call given the size of the appartment. I know a few lenders who use other insurers which might be more flexible in other ways, but appartment size is a sticky one.
 
WBC in general have become very very soft.

Simply, they dont want the business generally anyway.

46 u wont get a 90 % lend on, recently tried a 41 nice one bed in Coogee in an old style block of about 12.

best they would do was 60 % on full.

CBA may be an option for you

ta
rolf
 
WBC in general have become very very soft.

46 u wont get a 90 % lend on, recently tried a 41 nice one bed in Coogee in an old style block of about 12.

best they would do was 60 % on full.

Hi - hope you guys can help with a newbie question. Are LVRs different for investment properties versus PPOR (first home)? The 60% LVR seems really high...Thanks.
 
Hi Harold

In this case it would not matter if it was a PPOR or IP, same LVR issue

The lvr is governed more by

1. Are u eligible for mortgage insurance, this has subsets, of stable income, genuine savings, residential and job stability, clean credit, and not too much doo dad debt
2. The property u are buying must fit the mortgage insurers mould. 95 % of purchases do.

ta
rof
 
Thanks all for your replies.

Makes me feel a bit more comfortable at least that my MB is right and can't do much more re-finance wise.

Now the decision is, will lending restrictions ease so I can re-finance later. Or do I bite the bullet and sell to put the equity into another investment property that will be easy to re-finance later.

Decisions...
 
Now the decision is, will lending restrictions ease so I can re-finance later. Or do I bite the bullet and sell to put the equity into another investment property that will be easy to re-finance later.

Lending restrictions will ease... eventually.

Demographics are changing. The population is aging, people are choosing to live in smaller properties and there's no doubt that properties are getting smaller. It stands to reason that over time units below 50sqm will become more popular and lenders will adapt policies to meet this demand.

Right now though, lenders are being picky about what they fund. Money isn't as abundant as it once was so they're rationing it out. They'd rather give their money to an owner occupier with a big deposit and great serviceability, than an investor who's stretching both their equity and serviceability.

Money markets are already showing signs of recovery, but there's still a long way to go. It took over 7 years to recover from the 90's recession and it's fair to say that the GFC is a lot worse. It could be a while before lenders become more comfortable with small apartments.



BTW: I think Rolf's already mentioned it, but in the past the CBA has been fairly easygoing on < 50sqm. I haven't done one in a while with them and they have plenty of other quirks, but it would be worth a look.
 
i think you will find St George and Westpac the same when it comes to risk assessment. St George is now owned by Westpac, so i would presume their back office functions are merging, one of the back office functions should be risk assessment.
 
My sister in law works for St George in Kogarah. They have merged some sections, but credit assessment and policy isn't one of them (yet).

Westpac and St George were both very clear that the two would maintain septate business' and points of difference. Time will truly tell, but so far that's been maintained on the issues that count.
 
I can so see myself in the same situation in 2 years when my OTP place gets settled being under 50m2.As for Westpac i think they have lost the plot all my loans are with them as well trying to get anything done atm by them you might as well bang your head on a wall.

If i were you i wouldn't be selling just because a bank wont refinance i would be saving my little backside off for a deposit buying you time at the same time like PT said they will eventually lighten there rules up on 50m2.Buy the 2nd place then jump ship on them to a more friendly bank that will refinance the 50m2 at the same time.That's what i will be doing when my OTP property under 50m2 loan is due to begin.Best of luck...
 
I can so see myself in the same situation in 2 years when my OTP place gets settled being under 50m2.As for Westpac i think they have lost the plot all my loans are with them as well trying to get anything done atm by them you might as well bang your head on a wall.

If i were you i wouldn't be selling just because a bank wont refinance i would be saving my little backside off for a deposit buying you time at the same time like PT said they will eventually lighten there rules up on 50m2.Buy the 2nd place then jump ship on them to a more friendly bank that will refinance the 50m2 at the same time.That's what i will be doing when my OTP property under 50m2 loan is due to begin.Best of luck...

I am hoping that in two years lending will have eased up a little and vroom and yourself may find things a little easier in regards to financing your investment. Times, as always will tell.

Good advice.

Regards JO
 
".....At least 50 m in living area, excluding balconies and car space (For good quality properties located in a desirable and high
demand capital city metropolitan location, the minimum living area is 40 m2......"


that's from Genworth. "desirable and high demand".....talk about a grey area. If the valuation came back in all 2's or better (not that you'll get to see the valuation" then this would seem to fall into Genworth's criteria.
Your MB should have at least been able to find out the risk gradings on the valuation and argue the point if it was favourable.

Regards
Steve
 
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