Are there more relaxed banks for investment properties?

Discussion in 'Loans & Mortgage Brokers' started by KT_Blues, 26th Nov, 2019.

Join Australia's most dynamic and respected property investment community
Tags:
  1. KT_Blues

    KT_Blues Member

    Joined:
    20th Jul, 2015
    Posts:
    19
    Location:
    Sydney
    Hi guys, I really want to buy another investment property, but CBA calculator says no for the following reasons:
    1. when calculator considers 70% of rental income per year it actually makes my property cash negative. Where I know I have 2 cash positive properties in suburbs that has no problems with tenants (rockdale and labrador next to uni). Is there a banker who would consider more than 70% based on suburb. Like 80%?
    2. when CBA calculator calculates current interest paid its 8560 by 2K more than I am paying currently. I feel if they cutting rental income and then increasing loan percentage, it's overly conservative. Is there a bank that would put a lower buffer? I think currently buffer is ~6.8% if I calculated it correctly
    Overall I feel that I have 2 cash positive properties and 20% deposit for next property. But its no go from the bank :-(
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    3,600
    Location:
    QLD/Australia Wide
    Yes -speak to a good broker ASAP
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    7,283
    Location:
    03 9877 3000
    Firstly:
    1. All lenders shade rental income using between 80% and 70%.
    2. All lenders apply a buffer when assessing existing loans and other debts.

    However:
    Plenty of lenders that are much more generous than the CBA for investors, but there isn't a one size fits all lender. There are some excellent brokers on this forum who are investment specialists.
     
  4. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,398
    Location:
    Sydney NSW
    I agree with Peter that for many scenarios CBA are not the most generous on servicing at the moment, particularly investors.

    If they're using 6.8% as the benchmark for your investment interest rates this would suggest you are paying actual rates of 4.3% (+2.50% buffer) which are on the high side. If you restructured those loans down into the 3%s it might deliver you some servicing upside.
     
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,769
    Location:
    Canberra, Brisbane and Sunshine Coast
    It's just one banks calculator :)

    Throw those numbers into pepper or Liberty's calc and it will be a different story.

    Cheers

    Jamie
     
    Lindsay_W likes this.
  6. KT_Blues

    KT_Blues Member

    Joined:
    20th Jul, 2015
    Posts:
    19
    Location:
    Sydney
    Many thanks! will reach out to my broker first to see if he can try other banks and then get advice elsewhere. My actual rates 3.75% and unfortunately I fixed them up for 3 years in the beginning of the year :-(
     
  7. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,244
    Location:
    Sydney (Australia Wide)
    There's a whole spectrum of lenders with different servicing calculators again.

    Generally ADI's have similar lending calculators to each other, with minor variances between them. The spread between borrowing capacities of these lenders has crunched a lot over a 5 year period.

    Middle tier non-banks have a significantly improved borrowing power assessment. They usually bend the APRA guidelines here and there and get a better result by doing so. Its generally investor centric, as the 'bends' are made on negative gearing add backs, living expenses (particularly for INV properties), etc. You'll find an expansion of your borrowing capacity by 10-40%+ with these lenders, depending on the exact parameters of your situation.

    Then there's the aggressive non-banks - these lenders will offer very large sums of money and very very high DTI ratios. They're also doing it at great terms now as more and more competition opens up in this space. I.e. their getting close to competing on rate with the two groups above, but have significantly greater borrowing powers.

    You'll find you'll likely land a solution somewhere on the above spectrum.