With APRA etc its going to get more difficult for investors to source finance.... we are going to need to look outside the square. I am sure many already thinking/doing things differently, what about you??? For first time in 10 years I sourced my first lo doc with RAMS 6 months ago, just signed off on another lo doc lender for a recent purchase and looks like I will be sourcing another lender for my construction loan 4/5 townhouses. Interest rates are relatively low even construction loans are better than commercial rates (what I am sourcing). Not going to go into all the nitty gritty other than to say if you have issues sourcing finance start researching and as I mentioned think outside the square. You will need to meet lo doc criteria dependent on lender etc, for me its my accountant signing off on my business income, and ensuring the property/end values come in. Other than this I am not jumping hoops, and to date no massive fees involved with regards to setting up these loans. Perhaps we are going to see more lenders offering lo doc product??? Its working for me at the moment. MTR
I really don't think lo doc lending is going to be the solution to the regulatory changes that people are looking for. They're tricky enough to qualify for as it is, it's not about to get easier. The changes are making lenders tighten their investment related policies. Banks are actively looking for ways to reduce their investment loan books, they're not looking for ways to circumvent APRAs instructions.
Writing a lot in the commercial space, but not in resi. Residential lo docs are still for the most part being used for clients in the early phases of business setup and can't show their full financials - but the number of those able to provide the sufficient deposit req's + income is low. As always, there are a lot of non standard products available to people that they don't realise, but it's also a case of factoring costs, the hurdles and whether it's prudent for them to be taking on the commitment.
It's the opposite for me....resi low doc has been growing and is in high demand...we actually have a team dedicated to low doc only as the demand is high and it's a specialized lending with a bit of risk and a lot of due diligence ( seen plenty of fake and fraud accountants letters..) last 12 month i have seen 10+ new low doc lender enter this space....all insurance trust funds or companies... It's not the solution to the APRA ending laws...but it's a solution for self employed or property investors/developers with a ABN.
Stg for 4-5 townhouse for full doc yes...( 4 resi loan - via relationship manager and 5+ via comm loan). Low doc and alt doc it be private lending at 4-5.
RAMS 4 townhouses, $750K max resi rates, with accountants letter above you need BAS statements for 1 year. Second tier lender for my other project and waiting for more info on lastest lender. Seems there are plenty of lo doc lenders coming out of the woodwork.
are pre-sales part of the condition? what are typical private/lo doc lending rates now for 5 townhouse loans.
Not for my current 4 townhouse development I was also told will not be a problem with my 5 townhouse deve either, but am waiting for further info on this and we are trying for 80% LVR. Will know more next week and report back. MTR
They're are a couple of lenders who will take payg property investors under their low doc policy. That is they verify payg with payslips, but take the declaration instead of rental statements. Not a panecea, but it may give some investors enough to purchase one or maybe two more. Can help especially when the rental income isn't 'normal' self managed, student or high density etc.
how does this allow the investor to buy a few more? they lie about the amount of rent the receive? :S and if you had a boarding house. would they allow the high rent written down? or would they cap it / question it?
No pre-sales required for my 4 townhouse development. In fact my understanding is that RAMS would prefer that you did not sell any because you are then viewed as a developer which they don't want, rather than an investor. Go figure?? repeating what my broker said. MTR
I just had a full doc loan rejected by Westpac I think it may be mainly because of some nonsense servicability rules or the limit on what they count. The bank manager rang last week and said the loan was approved as he submitted it as a low doc loan. I don't know how that works but apparently there are different requirements. Weird !
If you had servicing issues with full doc I would have thought you would require a letter from your accountant confirming income to service debt, and buying in Company??
Not for residential but there's good products in the commercial space atm e.g. 75% LVR with just a stat dec saying you can afford it.
Correct - there's some strong low doc options with self certification at 75%, else no doc options to 65% with reasonable rates and LONG terms compared to the standard market offerings.
With a low doc loan for property investors some lenders will use the stated rental income. So yes, as I said in my initial post if it's a serviced apartment, or boarding house etc where a full doc lender only uses a percentage or none of this income, some low doc providers can use the whole thing.
