Borrowing capacity and existing mortgages

Discussion in 'Loans & Mortgage Brokers' started by iamrush, 16th Jul, 2021.

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  1. iamrush

    iamrush New Member

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    Hi Guys

    Looking at purchasing my first IP. I have enough equity in my PPOR to finance a deposit.

    Just wondering whether there are any lenders who assess existing mortgages on actual repayments as opposed to a higher assessment rate.

    This would be favourable to my borrowing capacity as my existing mortgage is fixed for the next 4.5 yrs at 1.99.

    Any help would be greatly appreciated
    Cheers
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Some of the non-conforming lenders do this. They tend to take actual repayments plus a percentage. This usually works out significantly better than what a lender using an assessment rate would calculate.

    The price you pay for this tends to be higher rates (unless you've got a very large deposit). These lenders will cost you more than a mainstream lender.
     
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  3. euro73

    euro73 Well-Known Member Business Member

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    In very basic terms, it goes like this...

    Majors, non majors etc. but for some minor points of difference around DTI ratios and floor rates, they are all essentially playing by APRA's rules..... exhaust your capacity there
    Then Firstmac... slightly superior capacity for some investors in some scenarios as they do some tricky stuff with neg gearing addbacks and dont use a DTI ratio, which can provide an advantage to some scenarios.... exhaust capacity there.
    Then you have to look at the Pepper's and Liberty's of the world.
     
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  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Get a good broker ASAP
     
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  5. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Have you done a servicing scenario without the need to use "Actual" repayments to get the loan you need ?
     
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  6. iamrush

    iamrush New Member

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    I’ve had a broker do a servicing scenario, but it came up short because an assessment rate of/ around 5% was used.

    Just trying to explore all my options.
     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Most brokers have similar lenders under their panel, Servicing for the big 4 is about the same. Followed by virgin/BOQ, followed by Firstmac then last but not least Pepper and liberty.
     
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I will chuck Resimac in there as an in between APRA lenders and Pepper, in a similar place as Firstmac in the servicing line.

    Hard to believe I know, but with most APRA based lenders a low actual rate does NOT help servicing - it does the opposite, since the plug rate or floor rate will be in the region of 5.5 to 6.2 with a neg gearing add back 1.99.

    Use say CBA as an example, if your actual rate was 2.5 %, the neg gearing addback would be 25 % higher, with the higher rate

    The reductions in rates have actual HURT the servicing of most portfolio builders with Apra based lenders for this reason ( and some non banks that use a similar servicing model)..

    Loans aint Loans

    ta

    rolf
     
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