CBA New Calculator?

Hi brokers,
Just wondering if CBA are introducing some new servicing calculator for investors? Heard on the grapevine that there are some changes being implemented and it's never positive for investors so I was hoping to find any new information about this calc.

Thanks

 

They've made some changes to policy last week that affect investors. In particular there was two changes:
* They're increasing the percentage of rental income used in assessments (probably from 70% to 80%, that's a slightly good thing).
* For investors with 4 or more IPs, they will now require tax returns to verify actual expenses associated with holding the properties (that's really bad in my experience).

They also recently moved from a Excel based calculator to an online calculator. In theory this is a good thing because they're likely to be more accurate, but I've generally found online calculators to be more work and less flexible in the modelling you can use them for.

The second point is the most concerning. It will effectively eliminate the CBA from being useful to people building larger portfolios.

 

I agree, especially I as a landlord choose to do some extra renovations or need to do due to rules/regulations changes (say like all smoke alarms need to be hard wired now in QLD by 1/1/2022) and then would like or need to refinance. So I could have years where expenses differ, are larger or smaller yet the lender will concentrate based on last two years of tax returns, is this correct?
When you say 4 IPs, is this in regards to total portfolio across all lenders or just with CBA's IPs?

 

I believe it was 4 IPs in total, including the any that are being purchased.

Interesting point about renovation expenses. You'd think that the banks would recognise one off expenses and ignore them, but my experience with most lenders makes me think we'll have to fight them on this type of issue.

 

Can someone explain why 4 IPs, why not 5 or 3 etc... Who makes these rules?
I could have 4 IPs worth say $10M and low LVR or 4 IPs worth $1M and high LVR?
How can that number have any impact whatsoever baffles me really?
Especially if ATO stats show less than 1% own 6 or more IPs of investors so assuming 1% out of Oz population would be around 25,000 of investors only. Honestly who makes these rules?
Personally, I assume having more tenants on fixed long term leases with low LVRs, less of an income risk than having say 1 or 2 tenants where 90% of Oz investors have. My logic is.... it is unlikely that all my 20 tenants at once will lose their source of income, whereas one or two people can much easier. Yet the lenders look at it from different point of view, why?
Hence if I have say a portfolio of say 20 IPs generating 20 rents, and say have LVR below 20%, having also a double digit Million portfolio, so it is basically self generating income, why can't this be the actual income someone can live off, why do I need to prove other income serviceability?
So it baffles me how one lender's calculator supposed to handle so many different variations of individual or personal circumstance one is in?
I think it would be wiser if each case was treated individually like how can one diet or exercise suit every person's individual health circumstances, really?

 

Those lending the money set the terms -

 

And who is 'those.....'???? One person a committee, any that make these decisions do they actually own more than 4 IPs, etc...? Would be interesting to know?

 

I have no idea, but imagine that each lender would have a team that works on these matters. A serviceability committee!

 

It would be a Credit committee of some sort internally, as a whole within the bank or just the residential department.

 

And how many in that credit committee?
Good point!
You know what next time I am asking my dear friend who is a treasurer of a certain bank, this person would or should know, right?

 

Don't know too be honest and not something I really bothered to look into

.

Maybe you can ask him to give us a warning when his increasing rates.

 

Are you kidding, this person wants their bonuses instead!

 

Yes that's why my broker said too, my case takes him ages to input whatever he needs to input?
And then I tell him you were the one splitting all those loans and pulling out titles instead of consolidation (wouldn't do this early in wealth building but for some at exit strategy it may help), and he laughs. Still waiting for refinance but hopefully it will be processed soon....?