Can bank refuse remortgage?

... going through refinancing P&I with bank of sydney.

Loan to value ratio: 50%

Situation: current PPOR loan is fully offset. I plan on using the funds later for investment. Bank wants to know exactly when.

Problem: I don't have a crystal ball. Could find a suitable investment tomorrow or in 2 years.

Can they refuse my application because they might not make money?

Broker said he's never come across this before..

 

50% LVR with money in offset or without ?

Because 50% LVR with offset could mean when you draw that money out for other purposes it could be 60-90% LVR

I guess they need for their documentation customers on lvr 50% with XXX offset but plan to draw out offset in the next 12, so we just use 70% LVR for loan accessment or whatever the draw down maybe

 

Unless for other reasons, they won't refuse the application coz you don't have the exact date..

You just need to let them know what's the reason to release the equity and rough timeline for next purchase. If it takes longer, so be it..

We just refinanced clients investment property and released equity for future investment.

Client hasn't found investment property yet but is actively hunting.

Cheers,

 

You want to borrow their money and they can refuse to lend it to you.

 

Did the bank ask what you're doing with your savings, or was the information offered? I wonder if it has more to do with the fact you've disclosed you'll eventually be taking on additional debt (it would be the assumption, if you're buying another IP), than the fact the loan will be fully offset.

 

50% equity, 50% debt which is fully offset by the offset account.

 

So this was the conversation minus some pointless banter.

Broker: I just called the Bank Of Sydney and they said they are wanting to confirm what you intend to do with the money in the offset account?

Me: Another property, shares, other investments. Not 100% sure yet. Need to get some financial advice.

Broker: Do you know when you are likely to strat using the funds.

Me:
Sorry no idea yet.
Is the way I'm going to spend the money in offset going to affect my loan approval?
why they're so keen to find out.

Broker: Because they won't really make anything from the transcations until you use your funds and that's why they are asking the question.

Me: Does it help if I said within 6 - 12 months? I really don't know..

Broker: Yeah, they be a lot happy with that.

 

Most strange, I have never had a lender ask that before.

 

It's hard to give an opinion without the full picture. But I can't really see the part that says they are refusing. Are they 'refusing' to give you a loan or did they just ask some questions about your offset funds?

It is not uncommon for lenders to ask questions about things which YOU may deem not specifically related to the actual loan itself. Like items appearing on your credit card statements or questioning spending habits for example. They are just trying to understand your character. It helps them build a profile on you so they are better informed.

 

With lenders now starting to not pay for loans that are offset, maybe BoS is taking it a step further and not writing them?

 

I was asked this question.
The offset was a small equity split loan. At the time I was wanting to do another split.

 

It's common practice with most lenders these days esp big four..

Cheers,

 

That makes sense. If you have money why do you need to borrow money.

 

Financial paternalism. Thanks Royal Commission.

 

It's a brave new world @Terry_w. The old rules don't apply.