Where to head next...

Hello All

First time I've posted here but have been reading for years, glad to be finally in a position to contribute. A brief rundown on what myself and my investment partner own, and then onto the fun stuff.

Prop 1: Val 550k, Owe 440k (80%), With Wesrtpac
Prop 2: Val 630k, Owe 500k (79.4%), Westpac
Prop 3: Val 420k, Owe 365k (87%), CBA

Have been on fixed rates with Westpac for the past 3 years at 7.09% (yes, it hurt!). Now looking at options to move the Westpac loans and hopefully draw up a bit if possible.

We have applied with Westpac to draw their 2 loans up to 85% as we have originally LMI'd both, so its cheap to top up. They've said a blanket no, due to the fact that they do not wish to loan us over 1m (the reason prop 3 is with CBA).

I've calculated that LMI to move / draw the first 2 props to 85% is circa 13k (5 & 7 respectively).

Combined incomes are 150k before tax, ex super, ex work cars / other perks. From what I've been told the serviceability is no issue, as we're getting good rent for all 3 properties and have little to no expenses.

I cannot express how disappointed and let down I've been by Westpac during our stay, having been a loyal customer for the past 10 years I would expect more. Both of us are 24.

We have the capability to put away 75 - 90k per annum combined (including tax returns, though we do have PAYG variations).

What we're after is a bank that is happy to lend and will not shy off once we start hitting higher numbers, I do not plan to stop at 3 or 4 properties but envision being able to achieve 5m+ portfolio in the next 5 - 10 years, ambitious perhaps but I do not want to get stuck with a bank who is not willing to come to the party.

Is the best option to have securities held with different institutions or is there someone to support us under the one roof?

Spare cash is being put into shares at present - but tossing up whether to sit in our offset account. Prop 3 we used 55k cash to purchase, but this time around I would consider 95% LVR inc capitalised LMI.

Any ideas on what the next step is? At the moment we are both feeling a little disheartened and lost as to the right move.

Many thanks in advance, if I've left any important details please let me know.

Chris.
 
Chris,

Your situation seems pretty basic. Are your two Westpac loans cross collateralised? Did you ask Westpac recently about topping up to 85% LVR again?
 
Hiya

The 85 % refusal at wbc is partly due to > 1 mill exposure...........but there is more to that.

Perhaps have a chat with a broker to get a better understanding of how the exposures to lenders work.

A bankker may be a reasonable option, but most wont be aware of what other banks issues or benefits may be

ta
rolf
 
Chris,

Your situation seems pretty basic. Are your two Westpac loans cross collateralised? Did you ask Westpac recently about topping up to 85% LVR again?


Hi Aaron - no they are held separately, we actually heard back from Westpac this morning with almost a flat no. It isn't the first time that they have refused us - but no matter which question we ask I'm not able to get any information out of them. Even an application though Westpac with Aussie received a similar answer mid last year.

We did originally ask for 90% - but I don't think 85% will make much difference in their books, I'm only talking 85% now with the prospect of moving the loans and reducing the overall LMI that we would face
 
Hiya

The 85 % refusal at wbc is partly due to > 1 mill exposure...........but there is more to that.

Perhaps have a chat with a broker to get a better understanding of how the exposures to lenders work.

A bankker may be a reasonable option, but most wont be aware of what other banks issues or benefits may be

ta
rolf

Hi Rolf - the other excuse they used today was our age which I believe should have no bearing on our ability to borrow and service the loans, I'm at a loss as to how we approach Westpac with further questions because as stated above this isn't the first time they have knocked back our application for additional loans

I should also mention that the valuations I have listed are actual valuations provided by Macquarie - which is one of our options if need be
 
Perhaps investigate doing some revaluations - maybe you can move lenders without paying LMI?

Hi Aaron

Seems as though we are able to move the Westpac loans with no LMI as theyre at 80% with those vals, I was just researching the possibility of drawing extra against each (another 5%) to be able to buy another investment property.

The other option is to move the loans, be patient and wait for a lower LVR and / or contribute cash again (would need 12 months for this). I want to be back into the market as soon as possible, and it seems that an 85% LVR on the Westpac loans with another lender is perhaps the only way to achieve this at present

Chris
 
Well unless you get some cash out there's no point refinancing at 80% unless the rate differential is massive (which is possible given your loan amount/LVR). I would suggest perhaps a desktop valuation with another lender which may get you up to 85% as well but may be worth it if you can get a lot of cash out. I've found St George's valuations are good recently.
 
Well unless you get some cash out there's no point refinancing at 80% unless the rate differential is massive (which is possible given your loan amount/LVR). I would suggest perhaps a desktop valuation with another lender which may get you up to 85% as well but may be worth it if you can get a lot of cash out. I've found St George's valuations are good recently.

Thanks Aaron - at 85% we can extract 60k which is the number needed to get us into something decent, every bank we've looked at is insisting on actual val's , which bank would be looking at desktop val's?

Westpacs rates are OKish but I wouldn't mind fixing and there are definitely cheaper rates out not to mention that Westpac have done nothing for us so I cannot see us obtaining any money from them in the foreseeable future.

I don't suppose theres anywhere out there that would give us a LOC to draw over 80% without LMI...?
 
Hi Chris,

Your numbers are very basic, and to be honest i don't think Westpac would say No JUST because your borrowing over $1m....most investors would be borrowing over $1m with the major 4 big banks, including Westpac.

I have plenty of investors with numbers that's way more leverage and" worse" than yours + borrowing over $2M and westpac has no issues. Without knowing your full details; the only reason i can see why Westpac would say no is probably because of cash out reasons, Westpac cash out policy is very strict especially once you go over 80% LVR and i found lots of bankers, even some brokers simply doesn't know how to "explain" a rejection if it's credit related.

Once your loans enter the LMI territory, Westpact doesn't like any cash out over $25,000 without proof ( and yes this is a Westpact LMI thing...)

Under 70%-73% LVR cash out is auto approved by the computer.
Around the 80% mark, cash out is case by case...
Over 80% - Good luck with westpac, unless it's under $25,000 or you have doc proof Or your servicing and asset is extremely strong.


----Possible option?----

1. Consider a lower LVR with westpac, if you like to stay with them
2. Consider a lower cash out amount with westpac, , if you like to stay with them ( if possible under $25,000 UNLESS you have doc proof)
3. Consider an external refinance, a lender with a more flexible cash out policy--- one could be macquarie, unlimited cash out up to 80-85% within reason.


What ever you do, limit the number of unnecessarily credit hits. So upfront valuation when possible and work within the "lender's policy"
 
Hello All

Prop 1: Val 550k, Owe 440k (80%), With Wesrtpac
Prop 2: Val 630k, Owe 500k (79.4%), Westpac
Prop 3: Val 420k, Owe 365k (87%), CBA

Have you considered Citibank? I haven't done much with them yet but they are doing 85% without LMI. There are a few restrictions for the first 6 months (no cash out or debt consolidation & $1m maximum exposure). After 6 months good history with them, they should allow cash out and increase their exposure limit to $1.5m.
 
After 6 months good history with them, they should allow cash out and increase their exposure limit to $1.5m.

Its good option if................we have found



Banks tend to should have all over themselves.

We have found that hope isnt an effective strategy, especially where there is a perceived age issue at hand.

ta

rolf
 
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