Cheap Investor rates

Non-bank reduces investor loan rates

 

• Decent calculator (among the better ones).
• Doesn't have to be cross collateralised
• 100% Income use (bonus/OT)
• Decent service and turnarounds.

They are setting themselves up well to win business (especially purchase deals).

 

They were offering this 8 months ago thru their sibling company 'Mortgage Ezy' then got rid of it. Glad its back.
Good rates too.
Hopefully it lasts.

@euro73, do we know if its 80%LVR max? Wondering based on the named of the products.

 

Looks awesome @euro73
What else can you tell us about them? Both good and Bad.
I have read over the years you mention them a number of times.

 

No use to us rentvesters

 

Mortgage Ezy isnt a Firstmac sibling.... they are a mortgage manager who dont manufacture their own products. Firstmac is a genuine non bank lender with its own products

I worked there for a long time. Look, they're a non bank lender, so you wont get branches and you wont get cutting edge phone apps. But if you want a good functional product at a low rate- take a look. Their servicing calculator is best in market, except for Liberty basically. Been around 30 years.... they are privately owned and they fully own ( and fund) loans.com.au as well.

 

The new rates are not bad - once IO is in the mix they're not as sharp but depending on the scenario they can come out ahead of other options.

The negative gearing calc method they use is what I think ALL banks should do it - it's just logical but alas..

 

I assumed this FirstMac product uses 7% assessment, rather than actual repayment, so different to the last mile lender such as Liberty?

 

Correct - no where near as potent but the higher than normal negative gearing addback is helpful.

There's also still other lenders who will buffer the existing repayments up by a nominal amount or P&I @ ~5.4%ish which are strong for a lot of scenarios.

 

I use them. Currently at 3.66 for my PPOR. Great team to talk to and i am currently in the process of drawing out some equity using a split loan and no issues so far, very quick and efficient.
Like you mentioned, the only cons is no branches and a very basic website. The most reassuring part is the great customer service and friendly people to talk to.

 

I like Firstmac.....better than larger places I have used, so far, so good, not trying to rip people off, they will do well if they stay like this.

 

I have started using Firstmac - fairly good service. Sharp rate and product.

Cheers Ivan

 

Sorry this might little off topic but din't wanted to open a new thread.

So I have been using online calculators to calculate borrowing power for my home purchase.I compared a few like loans.com.au, unoloans, NAB and could see there is a quite some difference in the borrowing power calculated given all the parameters are same. Infact unoloans and loans.com.au were off by almost 150K.Also when I compare NAB and say Firstmac, Firstmac assessing at 7% and NAB at 5.88, the difference is 100K!!

Am I missing something here? I can surely go to a Mortgage broker but just wanted to run a few scenarios first. Any recommended online calculator which can give reliable valuation of borrowing calculator which is in-line with the ones used by lenders?

Also, is home maker spouse assessed as a dependent like child or otherwise?Asking because some calculators explicitly ask the marital status whereas some just ask the number of dependants.

ta

 

So when most people mention Liberty on this forum, it is purely for the best servicing calculations?
If so, does that mean that other non-lenders might be better if you need to go beyond what the banks lend, but don't need to go as far as Liberty will lend?
ie, Say a bank will lend 500k and liberty will lend 700k - if you only need about 600k and if another non-bank lender could do that, are there upsides to going with them? Some better conditions of the loan maybe?
Liberty is mentioned with a fair bit of cautionary comments, so I am wondering if there is some sort of middle ground negating some of these problems?

 

Correct. They take "actuals" to 80% LVR. Qudos Bank ( the old Qantas Credit Union) does so as well...but they tend to turn the policy on and off . So when it's available ( a few months each year ) they are a better option than Liberty, as their rates are lower . Problem is, they tend to only offer the "actuals" policy a few short months each year. Liberty offers it year round. Qudos has recently stopped offering this, for example. They did the same thing last year...then they offered it again 8 months later. They'll do the same on and off thing moving forward, I would think.

Generally, most lenders have reasonably similar policies RE borrowing capacity. There are no really significant differences between them. Differences yes, but Liberty type differences? No. Lets call everyone excapt Liberty "the rest" . FirstMac definitely offers slightly sharper servicing than most of "the rest" ( except Liberty and occasionally Qudos) , but its not a huge difference. Sometimes though, you only need a little difference to get the dollars you need...so you should discuss with your broker or one of us brokers here.

Yes...you'll generally be able to access rates @ 0.5-0.8% cheaper than Liberty offers

The Liberty naysayers should remember - Liberty has a market niche. They are the only lenders consistently offering a pre APRA calculator. So they charge for it. So they should. So would anyone here offering something of such value, in a market where no one else is doing so. So in the end, if thats where you need to go to get money, its a very small price to pay. Yes there is a risk they could hike rates, and as you have nowhere you can refinance to, you could be gouged. Then again, that risk is now clear and present for every I/O product, no matter which brand of lender, so its unfair to single out Liberty. CBA and Westpac and NAB and ANZ and many others havent exactly been discounting I/O rates of late.... and remember that when they take a nother gouge in a few months time , which they surely will.


The best bet for any investor concerned about rising I/O rates and diminishing borrowing capacity is to have sufficient cash flow within a portfolio so that you can reduce some debt and deal with higher rates or deal with being forced onto P&I, which is now almost guaranteed to happen to all or most investors after the end of their initial I/O period. And that means cash cows - at least 1 or 2 , should be seriously considered for any growing or established portfolio.

 

Hows their servicing compared to say Liberty?

 

Appreciate the detailed info.

Do you know if other banks also turn on/off taking actuals? Or is it pretty much limited to Qudos?
Because if planning to purchase in 1-2 years, you might be able to time your borrowing and get a bit better serviceability, but still have it from an APRA approved lender? Does this sound like a reasonable solution how to borrow more?

 

No one else does this . Just Liberty, and sometimes Qudos. Some may mention Latrobe, but they take no neg gearing addbacks so their calc is weak.

You would have to be an optimist of the most extreme order to believe in that I say this with all due respect - you have buckleys and none of that happening unless APRA and ASIC have an internal revolution and the insane are placed in charge . There has just been a 30% I/O quota introduced to all ADI's ( authorised deposit taking institutions) so if anything, servicing is going to get much harder and I/O rates will get higher. Banks are currently writing over 40% of all loans as I/O, so they have to lose 25% of that to get under 30%. Thats not going to translate to easier servicing calcs and lower rates and longer I/O periods. Its going to translate to tougher servicing, higher rates and shorter I/O periods.

And to top it off, you have APRA and ASIC consistently and publicy telling the media that they are likely going to take further action at a later time.

I dont know how many different ways there are to say this. The reality is that whether they like it or not, resi investors are going to find that the traditional investor product policies- used very effectively by the pre APRA generation of investors, - ie I/O for initial periods of 5 or 10 years, and then easily renewable for another 5 or 10 years, and at the same rates as P&I - an extinct , or near extinct species before the year is out.

Instead they will face tougher servicing, higher rates and shorter I/O periods, as I noted above. The 30% I/O quota makes this an absolute certainty.

But this need not be any sort of disaster. The regulators are taking slow, incremental steps and anyone paying any sort of attention is being given ample, ample warnings on how to get prepared. What APRA would probably like to be able to say quite bluntly is something like this. "Dear investor - as long as you have sufficiently strong cash flow to manage P&I repayments on your INV properties, you'll be fine. You are the kind of investor we like. But if you are surviving on a combination of weak cash flow, neg gearing and historically low I/O rates, you represent a severe risk to the banking system and depositors monies if rates nudge upwards just 1% or more - so we want you to be moved onto P&I sooner rather than later so you can start getting some debt paid off and building some buffers . And if that means you struggle...tough luck. We are in the business of keeping depositors money safe, not keeping your overleveraged /underfunded portfolio safe. If you were silly enough to overleverage with such weak cash flow, in the hope of scoring pots of gold, do something about it NOW. The smart play would be to get some cash flow into your portfolio NOW or sell off a property or two NOW , because we are not going to relent on this tightening, and we in fact intend to ramp it up even more before years end"

Now, they're never going to be that blunt, because it would scare the bejeesus out of people , but make no mistake that's what they are trying to tell you through diplomatic, carefully worded media releases. So each investor has a choice to make; those who continue to ignore the overwhelming writing on the wall, and keep leveraging up to chase growth at the exclusion of half decent cash flow, better have lots of surplus income laying around - because equity isn't going to pay the monthly repayments for them, and the banks wont be getting any reprieve from the 30% I/O quota any time soon.

 

Heard of someone a few weeks ago who has all their IO expiring in next 12 months and cannot extend... they are up for $60k pa in increased payments. Cashflow certainly is getting far more important!

 

Yeah point taken.
Thanks for taking the time to write that up.