Buying first PPOR, Broker? or go direct to 3 x banks?

Hi all,

About to plunge into our first PPOR. Just wondering what the best method is in obtaining finance and the best rate/deal? Based in Newcastle and thinking about approaching Newcastle Permanent and Greater Bank individually for a quote, then also thinking about maybe seeing a broker for a third quote? I bank with CBA, and have done so for 19 years since I was 14, but not sure they will be competitive?

Lastly, bonus question, as a joint applicant, are we better off having a $65,000 deposit on a $600k property with a $15,000 debt, or are we better to pay off the debt (so carrying $0 debt) but have a lower $50,000 deposit for a $600k property?

Cheers for any help.

 

See a broker - depending on your scenario visiting 3 lenders could cause an auto decline especially at high LVRs.

The answer to your second question will also depend on your bigger picture - there's no one set answer to this BUT the additional lmi you'll pay on the home loan will most likely mean keeping the debt as is will be the better option.

Also, you'll be paying LMI so you'll want to be sure that the lender you choose will allow you to reuse it access equity down the track if you're hoping to invest - there's a lot more to consider than just rate and price. A cheap rate can end up very expensive if the lender is not a good long term fit.

 

My bet it that you end up with CBA whether you go to CBA direct or broker.

 

Run through the numbers on what's best to payout the existing debt.
Having larger deposit will mean lower LMI cost
Just work out if it's better to pay more LMI to payoff the debt which will likely have higher interest cost.

 

The debt currently has 0% interest and isn't due until June 2018. Given our jobs and cash flow, the debt would easily be paid off by June 2018 even with a mortgage as outlined above (as repayments are about the same as our rent currently and we're still saving a s**tload!)

 

Don't pay it off with your deposit then. Just make sure you can still save a s**tload once you have mortgage payments, rates, insurance and so on - assuming they'll be higher than you currently pay in rent.

 

What makes you say that Brady?
If the shoe fits I'd back in a few others before CBA at that LVR.

 

Agreed - looks like it's going to be a 90% + lend when LMI is capitalised.

Ideally you'd want to use a lender with an LMI DUA.

Not sure how Newcastle and the Greater treat higher LVR deals - but CBA is generally my go to for these sort of deals.

Perhaps look into BWA too.

Cheers

Jamie

 

- They have banked CBA 19 years, likely very comfortable with systems/netbanking
- CBA is currently very competitive for new business
- LMI is priced well with CBA
- CBA has DUA
- Approval would like be the easiest path for approval with CBA given history
- It's there 1st PPOR, existing banks are perfect for these types of clients.

 

I agree, but 1 in 10 clients like this I put to cba come back declined, an old credit card overdue, or some sort of existing product conduct.

Being an existing customer helps marginally at best. it does expose you to greater risk, banks memories are long...

 

1 out of 10 of your clients has conduct issues? Is that normal for you? Are you able to get them accepted with mitigation?

Being existing customer helps a lot with scoring - as per the OP there is LMI involved, pending if they have taken into account purchase costs looks like between 89-92% + LMI deal.

 

1 in 10 of existing cba clients who wanted to stay. I probably had a client profile that didn't score well, high lvr, construction, fhog or 'slod' as funds to complete.

I disagree that being an existing customer helps much with scoring. We will have to leave it there as neither of us are privy to how scoring actually works, we only get the bs the marketing people try and feed us.

 

Im not a broker. I would strong recommmend a good property savvy broker over and tied lender. Its like the difference between a real estate agent selling a property vs a buyers agent

 

Having worked in Veda IT for their flagship Veda score Apply/Veda check product I can confirm that being an existing customer does not has any impact on scoring.The scoring algorithm works on data points like how long you lived in current address, number and kind of of credit enquiries (A home loan enquiry is a heavy hit as compared to lets say a new phone contract or a credit card), defaults, age of credit file etc.

Although having a long relationship with bank can help swing the borderline cases in your favour.

 

I'm confident that it does impact scoring. And it's not from marketing people.
I've been told that it definitely does, they wouldn't disclose 3, 6 or 12 months as that's to much info - but confirmed being an existing customer does impact the scoring.

Not talking about veda scoring, referring to internal category scoring that CBA completes.

 

I would to.

But in the OP case with a few more details I would suggest a good property savvy CBA banker would far excel over the good property savy broker

 

If you can keep the total LVR to 90% or less and overall it's a fairly straight forward application, there are a lot better options out there than any of the major lenders.

 

I thought Westpac were looking after me after 25+ years until we shopped around using a broker. Banks have next to zero loyalty to long term customers.

That said they recently credited us a debit card purchase for weekly shopping as a thank you for years of loyalty. I didnt want to offend them when they did it three times in the week (three different accounts) ....I suspect they are still well ahead.