Westpac std variable discount >1.5 mil

[Mick C]

equity release/cash out is not just about having a deposit to invest in property further - it could be used for;

- Emergency funds ( medical?)
- Debt payout
- Personal
- Another investment needs
- Renovations/ upgrade

You may not need it, but it works like an insurance policy... security and flexibility.

 

[Aaron_C]

Wow that is a big LMI premium. Perhaps consider REF instead? Your premium saved is 30%.

 

[dredfern]

Hadn't heard of REF. Will have to look into it cheers!

 

[Rolf Latham]

.

I guess I was just thinking that in a few years

Life is what happens to you while you are making other plans - John Lennon

The below isnt directed at you personally or specifially, its directed at ALL the people that I have spoken with over the years that are OBLIVIOUS to the finance risks they are taking on.

Clutching to an unlikely weeny possible rate benefit in year x against a bunch of unknown and unquantifiable risks isnt "best practice" risk management, dont think how will this affect me, think ...............

if x happens what is the outcome for my family.

What would be the financial cost ?

What would be the emotional cost?


The fact that your broker is a "door mat" and isnt slapping you around a little to test your resolve is a concern to me, but then I also realise some borrowers are so strong in their views, or the brokers financial position is so tenuous that they cant risk to offend you and lose the business.

Harsh, yep, but better you know what you could have prevented from happening.

At least now you cant say, I didnt know.........and to think you came here for a chat about rate and you get the "guilt play"


ta

rolf

 

[dredfern]

Life is what happens to you while you are making other plans - John Lennon

The below isnt directed at you personally or specifially, its directed at ALL the people that I have spoken with over the years that are OBLIVIOUS to the finance risks they are taking on.

Clutching to an unlikely weeny possible rate benefit in year x against a bunch of unknown and unquantifiable risks isnt "best practice" risk management, dont think how will this affect me, think ...............

if x happens what is the outcome for my family.

What would be the financial cost ?

What would be the emotional cost?


The fact that your broker is a "door mat" and isnt slapping you around a little to test your resolve is a concern to me, but then I also realise some borrowers are so strong in their views, or the brokers financial position is so tenuous that they cant risk to offend you and lose the business.

Harsh, yep, but better you know what you could have prevented from happening.

At least now you cant say, I didnt know.........and to think you came here for a chat about rate and you get the "guilt play"


ta

rolf

ROLF, I'm not as much concerned about the rate as to getting the deal across the line now. My thought was with WBC I would be in a stronger position but maybe this isn't the case

I must admit, I don't really understand what you are saying in regard to how I can eliminate the risk. Are you saying that by going with another lender now I can more easily be able to release funds in future? (once I've build equity) and that by having it all with WBC it will make it harder?

 

[Aaron_C]

I must admit, I don't really understand what you are saying in regard to how I can eliminate the risk. Are you saying that by going with another lender now I can more easily be able to release funds in future? (once I've build equity) and that by having it all with WBC it will make it harder?

The point is (as others have pointed out) that WBC has a DUA up to $1m with LMI deals. This means that next time you want to get more money out, the mortgage insurer and WBC itself (through the computer credit scoring) will kill any loan increase you want to get, if you want it. This isn't good because you've already paid LMI with WBC so you are locked in to them unless you want to pay LMI again and waste money.

 

[HiEquity]

dredfern

Just to add a non-broker voice to this thread, you have received some fantastic advice in this thread from a number of excellent brokers. They are all singing the same chorus - don't do this with Westpac if you can at all help it.

I'm singing the same tune. You really shouldn't be looking to do this with WBC. It's a bad idea for a number of reasons. Look past the phony 0.1% and it should be staring you in the face. Doubling down like this with one lender is only good for the lender - not for you. Do what is good for you.

Or completely ignore all this excellent and free advice and do whatever you like... up to you!

 

[dredfern]

The point is (as others have pointed out) that WBC has a DUA up to $1m with LMI deals. This means that next time you want to get more money out, the mortgage insurer and WBC itself (through the computer credit scoring) will kill any loan increase you want to get, if you want it. This isn't good because you've already paid LMI with WBC so you are locked in to them unless you want to pay LMI again and waste money.

Ok I think I'm understanding, if I needed funds 'for any reason' in the near future they won't allow it. So safer to always be under 1 Mil with any lender while in LMI territory right?

I'm about to discuss lenders with my broker, but this gives me great info!

Thanks, much appreciated!

 

[dredfern]

Guys what does 'DUA' stand for?

 

[Aaron_C]

Guys what does 'DUA' stand for?

Delegated underwriting authority. Means they can write mortgaged insured loans without Genworth's direct approval.

 

[Peter_Tersteeg]

Guys what does 'DUA' stand for?

Delegated Underwriting Authority: The lender can sign off on the loan without sending it to the mortgage insurer. Your odds of loan approval decrease dramatically once it has to go to the mortgage insurer for assessment. We've seen plenty of instances where the lender thought it was a good deal, only to have the mortgage insurer knock it back.

 

[Marty McDonald]

Thanks for the responses guys!

This PPOR will almost definitely be my last purchase for about 5 years by which time LVR should hopefully be well under 80%!

New loan will be 756K plus lmi capitalised of about 19K. LMI is a lot but I figured 2% of the value was better than waiting for values to rise 10%.

I guess I was just thinking that in a few years when LVR is below 80% I might be in a better negotiating position having it all with the same lender, and could easily move if needed. But I guess it also increases the chances they will start rejecting future loans.

Cheers!

Hey,

So if I understand correctly you are saying you don't need to increase the existing loan for the deposit on the new purchase? So 10% plus stamps etc are coming from savings? If that's the case I would be looking at the lmi costs for your new purchase as a major differentiator between lenders as there may be a big difference between premiums.

If you do need to tap the existing IP then this could be tricky at 90% with cash out and going to a different lender for the PPR...but not impossible and better than the alternative.

 

[Brady]

Delegated Underwriting Authority: The lender can sign off on the loan without sending it to the mortgage insurer. Your odds of loan approval decrease dramatically once it has to go to the mortgage insurer for assessment. We've seen plenty of instances where the lender thought it was a good deal, only to have the mortgage insurer knock it back.

And as I mentioned before the big issue is when it's outside DUA it can mean it goes on the mortgage insurers service not the lender. So you might be getting a ~5.5% interest rate, the bank might be assessing it at 7-7.5% but the mortgage insurer could be assessing it at >8% so although the bank is happy, the mortgage insurer might not.

The perils of LMI

 

[Rolf Latham]

And as I mentioned before the big issue is when it's outside DUA it can mean it goes on the mortgage insurers service not the lender. So you might be getting a ~5.5% interest rate, the bank might be assessing it at 7-7.5% but the mortgage insurer could be assessing it at >8% so although the bank is happy, the mortgage insurer might not.

The perils of LMI

The contra was on the table this week at an Advantedge (Choice/Plan/Fast white label) gathering.

There was a definite undertone that DUA wasnt a useful thing for them due to the restrictions it would place on them for "normal" deals.

Must be a bunch of unusual brokers, coz its only under DUA that you have reasonable surety of anything out of the box making a fit ( and that applies to CBA, NAB et al)

ta
rolf

 

[Peter_Tersteeg]

Agreed Rolf, last week I told my Advantedge BDM that if he wanted to see more deals from me, then need a DUA otherwise it simply isn't worth my time to lodge LMI deals.

 

[dredfern]

Hey,

So if I understand correctly you are saying you don't need to increase the existing loan for the deposit on the new purchase? So 10% plus stamps etc are coming from savings? If that's the case I would be looking at the lmi costs for your new purchase as a major differentiator between lenders as there may be a big difference between premiums.

If you do need to tap the existing IP then this could be tricky at 90% with cash out and going to a different lender for the PPR...but not impossible and better than the alternative.

No need to tap existing equity. With some forward thinking already did this 18 months ago pulling out 60K into an offset and have saved the rest. So I have the funds ready to settle with another bank which I'm now exploring!

I had no idea about this DUA stuff! I came here with a different question and learn't something new and very valuable . Thanks guys!

Cheers!

 

[Rolf Latham]

So I have the funds ready to settle with another bank which I'm now exploring!

good risk management

ta
rolf

 

[dredfern]

So after discussing with my broker I'm considering the below offer.
I saw Advantedge has been discussed in previous threads.
My broker describes them as small enough to be easy to deal with, with the backing of one of the big 4. I don't need any bells and whistles so might be ok.

Advantedge 90% loan
loan 1 50% 2 year fixed at 4.89%
loan 2 50% variable at 5.48%
Both loans say $330 annual fee.
LMI works out to be 18K (WBC was 19K)

My wife already has a loan with Homeside so have to make sure that the mortgage insurer doesn't consider our loans combined both being NAB pushing over 1Mil?
And wondering what they will be like in future if/when I want to draw out more money as that was the point of not going with WBC and being over 1 Mil?

Any thoughts on the above offer?

 

[Peter_Tersteeg]

Essentially the advice you've been getting is to diversify, which is what you're doing. The Advantedge deal is very compeditive and if you don't need the bells can work quite well.

Be aware that Advantadge lenders (ChoiceLend, FastLend, PlanLend) don't have a DUA for LMI loans, so the loan will still likely end up in front of a mortgage insurer. There will come a time where you can't access more than 80% of the properties value. For the moment though, this probably won't be a serious problem if your broker knows how to structure the application to keep the insurer happy.

 

[Shahin_Afarin]

They are a good lender - no issues there. Servicing is extremely conservative though.

Regards

Shahin