Your opinion on "NEW" RAMS 90% no doc

[Mcgrillius]

Rams

I have just put in an application for a loan of this type, The LMI/rams risk fee based on $265000 purchase with a 26k deposit (loan of 240k)came in at $6000.00

I don't think this calculation is correct, that is over 2%

can anyone shed some light on this for me? Please?

 

[Welcome]

That does sound hefty!

I have tried calling someone from RAMS to find out ballpark figures for the risk fee and the first excuse was he doesn't have that info and needs to wait for his boss and will call be back that arvo. Called him the next day and he was on another call and said would call me back. Called him the next day and he said he would find out and call me back. I then gave up, but perhaps that was why he didn't want to call me back?

 

[Kristine..]

So, Welcome

Ring me! I will work it all out for you and see what else you can do as well.

Sometimes the 90% is the most appropriate choice, but sometimes the 85% Option is a better bet.

Cheers
Kristine

 

[Rolf Latham]

2 % on a 90 % lo doc lend doesnt sound too bad ?

Typical MGIC rate would be around 1.7 % ish per cent plus Stamps, so around 4500

ta
rolf

 

[Kristine..]

Mcgrillius


What State is the security in? Your tag simply says 'Oz' which doesn't give much of a clue.

And I don't get anywhere near $6,000 - so is this a Full Doc loan or a Low Doc loan, and is there any other security involved ie have you recently insured another deal with the same lender / same insurer?

Your example is 90.52%LVR, which is beyond the range of the SE Pro Pack. A bit more information would be very helpful.

Cheers
Kristine

 

[Spectre]

this might help

http://www.ramsbroker.com.au/

Calculators tab

 

[Mcgrillius]

Mcgrillius


What State is the security in? Your tag simply says 'Oz' which doesn't give much of a clue.

And I don't get anywhere near $6,000 - so is this a Full Doc loan or a Low Doc loan, and is there any other security involved ie have you recently insured another deal with the same lender / same insurer?

Your example is 90.52%LVR, which is beyond the range of the SE Pro Pack. A bit more information would be very helpful.

Cheers
Kristine

State is N.S.W, Is a low doc loan and no other security involved. The Figures were/are based on a 240k loan with a 265k purchase, I have the deposit in cash. (25-27k)

I knew there would be LMI etc i just didn't think it would be 6k!!

 

[Welcome]

Ring me! I will work it all out for you and see what else you can do as well.

Will do when the time is right!

1) Is the SE Pro Pack to 90%LVR available for hybrid trusts? If not I assume that normal discretionary trusts are suitable?

2) I notice in the lender guide it says:

"If trustee borrower is a company, we must have adult beneficiaries’ guarantees and copies of adult beneficiaries’ taxation returns, as well as trustee and Directors guarantees".

Do they still want the possible beneficiaries financials & guarantees even if it is a discretionary trust?

Cheers

 

[Kristine..]

Hi Welcome

Many trusts are badly set up.

The reason that adult beneficiaries must be actively involved in the application (whether full doc or low doc) is so that the beneficiary is clearly indicating that they are aware that the assets of the trust are being mortgaged.

Doh! I hear you say. If the Trustee of the Trust is buying a property to be held in the trust, of course the property will be mortgaged.

Well, not necessarily. And a poorly designed trust is left open to the Trustee appointing future beneficiaries who are not in the permission loop.

A beneficiary may later claim that the Trustee had unlawfully mortgaged the assets of the Trust without their knowledge or consent.

This could invalidate the mortgage security. As the lender is in the business of lending money, and not in the business of resolving disputes between Trustees and beneficiaries, the lender will insist on all adult beneficiaries giving consent to the actions of the Trustee. The most obvious way of determining if the beneficiary is party to the mortgage of the asset is for the beneficiary to be a party to the application.

Lenders are not usually concerned as to the nature of the trust, but the involvement of actual beneficiaries can have long term ramifications.

In my experience, many trust deeds are flimsy documents. Lots of pages, light on substance. Applicants pay a small further fee for a trust application as the lender seeks independent legal advice on the structure of the trust. The assessment of the trust itself is not done by the assessor of the application ie whether the application meets lending policy, servicing criteria etc

As with natural persons, not all applicants are legally capable of applying for or establishing a mortgage loan facility. Just because you have a trust does not mean that ipso facto the trust is entitled to hold assets nor that the Trustee of the trust, particularly if a corporate trustee, is entitled to perform certain or all actions on behalf of the trust.

Hope this helps

Kristine

 

[kelvinh]

Anyone happen to know the current interest rate for the 90% or 80% low doc loan SE Pro Pack ?

 

[WinstonWolfe]

PT Bear, Luke, 007, Rolfs, Mark, Kristine...........so is RAMS competive over 5 years???

What's the option????

 

[Rolf Schaefer]

Rams - Hdt

At 85% LVR or 90% LVR I would say that they are very competitive; however; at 80% LVR there are cheaper options available.

PS:
We have just been advised by our broker channel that we can now write again RAMS loans; they are no longer only available through RAMS franchises.

PPS: I have given 2 of the most commonly used HDT trust deeds to RAMS credit and they said that on the face of it they should be acceptable

 

[Nth Brisbanite]

I recently took out some loans from Macquarie, thinking that I'd got a good deal. Yesterday I found out that their rates are going up by .7%. I am now thinking of refinancing to RAMS because they are so competitive in their 85% and 90% lo doc loans.

My question is: Are the current lo doc RAMS rates (about .75% lower than standard variable) sustainable? I am fearful that if I refinance to RAMS that they will increase their rates substantially, once there is any hint of a problem.

What do all you MBs out there think?

 

[Welcome]

Hope this helps

Yes that does help thanks for that. I guess the point I was getting at is that discretionary trust deeds are normally worded to include the widest range of potential beneficiaries as possible. So if going by the trust deeds definition of beneficiary could easily be 20+ adults in some cases that RAMS will need guarantees and financials from.

Or realistically do they only want them from the few people who are likely to receive distributions from the trust and not all potential beneficiaries?

Cheers

 

[Kristine..]

Hi Welcome

I think this discussion regarding trusts - albeit interesting - may be sidetracking the thread.

It is also not productive to be discussing matters of lending principle / individual circumstance, no matter which lender, as the casual reader may think 'oh, that's allright, then, I can do this or that' when the only decision a lender can make is on the basis of an appropriate application

In this instance, this thread is about a low doc product (the SE Pro Pack) but the question regading trusts is couched in terms (tax returns) relating to full doc applications.

As I wrote in my previous posts: I have seen an awful lot of badly written trust deeds. The purpose of a trust is whatever it may be, but a lender is concerned regarding security of the loan for which they are responsible.

It's no good setting up a complicated or nonsensical trust and then expecting a lender to accept it and treat it as if one natural person is applying for a loan.

And it's no good setting up a trust which one lender 'on the face of it' will accept but no other lender will have a bar of.

So getting back to the SE Pro Pack and to the point raised by Nth Brisbanite regarding rates:

Dear Nth B: Rates are, at this moment, anybody's guess. Remember back in August when the The Banks urged people not to deal with securitised lenders and named a few names and made alarmist comments regarding interest rates? Haven't The Banks increased their rates at least as much as any other bank or non-bank lender? Isn't a significant portion of the The Bank loan books now securitised as that's where the residential mortgage loan funds have come from in recent years?

If we (any of us, we) choose to stay with, or refinance away from, a lender, we 'pays our money and we takes our choice'. Lending operates in a free market and, as such, will be subject to market forces just as any other commodity fluctuates with market forces. Coffee, wool, iron ore and money - scarecity raises the cost of the raw material.

Fixing a rate gives a borrower the ability to rely on the rate for a particular period of time. However, when rates go down, the person on a fixed rate may be very cross indeed. I have a friend fixed two loans at 17.5% for 5 years and by the end of the five years the general rate was about 9.5%. However, she fixed the rate because she was concerned that rates would rise above 17.5% which they may have done. So overall, she was satisfied with her decision.

Will RAMS or any other lender raise rates? Yes, of coure they will if they have to pay more for the supply. Will they lower them as supply becomes cheaper? Probably. Westpac is the credit provider for RAMS and essentially this means using 'Australian' money. Australian term deposits (not necessarily Westpac) are now being advertised as offering about 8.00% for six month term deposits.

It all comes back to using our own judgement and trying to choose the best available option of the day

Cheers

Kristine

 

[Rolf Latham]

Hiya

Not a trust specialist....................but I wont be using that product for trusts if those requirements are set in stone, and BTW there are other lenders and mortgage insurers that try this one on, as well a RMD's and or Fixed and Floating Charges over trust companies.

There is NO way one can reasonably expect a non-spousal adult bene to provide financials AND a guarantee and then be stuck with joint and several liability, AND quite likely never derive a benefit from the loan.............

The concept of grabbing a guarantee from a non-spousal beneficiary is in most cases not only immoral, it goes against most lenders OWN rules.

Most discretionary trust deeds give DISCRETION of distribution of capital and income.

Thus, as a non-spousal beneficiary that is guaranteeing a loan you may NEVER see a benefit for that guarantee.

This is regarded by most lenders as a Third Party Guarantee, IE, the Guarantor is outside of the transaction and therefore derives no direct benefit.

The ONLY time such a guarantee is acceptable is where the guarantor is a "spouse" of the trustee, because in such cases the family court would set the trust aside in any case, so ultimately there would be a benefit.

The long term effects of providing guarantees to assets you have NO control nor derived benefit from over are just too great to contemplate.

There are only a hand ful of lenders that dont see such a guarantee as a continget liability ...............so the next time u go for a loan u will have a liability for x and likley no income against it.

As I said earlier in most cases of ma an pa trusts its not an issue, but if the lenders ask for stat dec to name all the adults benes of the trust ..............well what a mess that will be !

ta
rlf



ta
rolf

 

[tiger]

How long do you think this will be available for?
Are they likely to pull it soon or will this be a longer term deal?

 

[Rolf Latham]

Hiya

I think the core issue comes down to the mortgage Insurer, being MGIC, relatively new.

They are also backing other funders on NO doc 80 and lo doc 90 % products, but none are as smart a rate as the RAMS product.

I think Westpac has taken a position that they will continue to fund as long as they can get the deals underwritten by the insurer.

ta
rolf

 

[rambada]

So for risk analysis - what are the chances of RAMS upping this rate by say 1% in one go?

If they follow RBA rises, it will still be competative. But if they raise rates above RBA increase (as other banks have - but I'm refering to 0.5 - 1% above RBA rates) is this probable?

I guess anything is possable but probable? And as previously stated, if RAMS % gets ugly, you can move on. Then there is the break fee (how much?) and also how commited your money is at 90% LVR.

Just wondering if RBA + 1% is probable?

 

[Rolf Latham]

Cant call me on this one

Probable, but 1 % is unlikley.

I can see some margin to 50 pts maybe to get half way to the rest of the market (whats left of it)

On the other hand, because the risk is underwritten, and the source of funds appears to be mainly "warehouse", there may be no real margins over RBA

The 1 % get out cost is quite reasonable though compared to many funders in this sphere and that will also help retain commercial reality

ta
rolf