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Borrowing Capacity Differences CBA vs Westpac

Discussion in 'Property Finance' started by smator, 22nd Jul, 2015.

  1. smator

    smator Well-Known Member

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    Hi guys

    Just got off the phone with my broker and he's told me that under Westpacs calc I can service a loan of $1.03m but with CBA this drops to 616k. Seems crazy that there's such a wide variance!

    Is this in line with what others are seeing? I guess it's more important than ever to have a good broker who's on top of the current changes.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Every bank calculates things differently and looks as circumstances differently.

    For me it may well be the opposite way around.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes, a wide variation between lenders is common.
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    There are bigger gaps than ever these days with borrowing capacity among lenders - hard to say whether it sounds right based on the limited info.

    Cheers

    Jamie
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    What's the lvr? Over 90 CBA won't use neg gearing which can make an impact.
     
  6. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker

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    Westpac dont do negative gearing period so I don't think its that - looks like you have a decent income but you also have a huge amount of loans particularly with CBA.

    Its important to note that every individual's servicing is going to be different across banks particularly with the recent round of changes.
     
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  7. Redom

    Redom Mortgage Broker Business Member

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    Hmm i think the changes are bringing some of the calculators a little more uniform to each other, particularly for investors as the disparity between treatment of other mortgage debt (usually the biggest 'expense' item for an investor) is closing between the big4.

    I'd guess you've got one/two loans with CBA and that'd be why your borrowing power is lower? Or perhaps it may be a series of high yielding properties. I have a couple investors who purchase at 8%+ yields to stretch their position further, CBA caps this to 6% so it doesn't help with them.

    Cheers,
    Redom
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It would be worth flicking your details over to one of us to see where the discrepancy lies - like you say, it seems like an unusually large difference.
     
  9. Watson1

    Watson1 Well-Known Member

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    I suspect the difference lies with 15 years interest only being applied as in some instances it can decrease borrowing capacity by around 25-30% which could be one of the main reasons why there is such a huge variance. That would be my guess.
     
  10. smator

    smator Well-Known Member

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    Pretty much spot on, have a loan with cba and property is positively geared.

    Loan will be for PPOR, 80-85% lvr, but looking for no LMI.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    so whats CBA got to do with that ??
    ta
    rolf
     
  12. smator

    smator Well-Known Member

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    Not sure what you mean Rolf? Currently have a loan with CBA, broker wasn't recommending using them again, just giving me an illustration of the difference servicing calculators used by different banks.
     
  13. Mick C

    Mick C Well-Known Member

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    Westpac No Negative gearing...so generally WBC will have a lower borrow cap for investors with multiple IP.
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    85 % no MI with CBA wont be easy

    ta
    rolf