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Credit Changes

Discussion in 'Property Finance' started by Shahin_Afarin, 19th Jun, 2015.

  1. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Marty posted an excellent thread in SS so its good to keep that thread running - here are CBA's credit changes (they are quite big changes):


    NEW SERVICING LOADING - we will automatically apply a new servicing loading of 20% to all repayments on existing CommBank and OFI Home/Investment Home Loan and Lines of Credit.

    ----- This is a significant impact to servicing - the bigger your portfolio/debt the bigger the impact.

    CHANGES TO INCOME VERIFICATION - we will only accept 80% of any Work Allowances/Overtime, Investment income, Bonuses and Commission for servicing purposes for all new Home/Investment Home Loan and Line of Credit applications.

    ----- I don't think this is a huge impact for the majority of borrowers.

    NEGATIVE GEARING CHANGES - for all new Investment Home Loan applications we will remove negative gearing calculations for servicing purposes where the base LVR is more than 90%.

    ----- I don't think this is a huge impact for the majority of borrowers. 90% plus LVR lending is becoming more and more difficult and everyone just needs to adjust to this.

    NEW LVR FOR OWNER OCCUPIED - the maximum LVR (including LMI capitalisation) for all Owner Occupied Home Loan applications is now 95%.

    ----- This has been reduced from 97%. I don't think this is a huge change.

    REDUCTION IN RENTAL YIELD - we are reducing the maximum acceptable gross Rental Yield for servicing on investment properties to 6% p.a.

    ----- NAB have had a similar policy. I don't think this is going to be a huge impact for the majority of investors.
     
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  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    lol - just copied it, came to the forum to paste it....and voila, beat me to it

    Cheers

    Jamie
     
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  3. tobe

    tobe Well-Known Member

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    Boom
     
  4. kr11

    kr11 Well-Known Member

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    How does cba compare now to west pac andnab for servicing. I am assuming anz is still the worst?

    thanks
     
  5. WattleIdo

    WattleIdo renovating Premium Member

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    Thanks Shahin - interesting.
    Can you please explain this one to me? I would've thought they'd be into a healthy yield?

    REDUCTION IN RENTAL YIELD - we are reducing the maximum acceptable gross Rental Yield for servicing on investment properties to 6% p.a.
     
  6. tobe

    tobe Well-Known Member

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    They aren't into a healthy yield. They want to avoid lending to investors that are too 'rent reliant' and properties that are higher yielding can be seen as more risky. Nab have had a a similar policy for a while now.
     
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  7. WattleIdo

    WattleIdo renovating Premium Member

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    Oh OK I get it. So they're happy for you to go pos but they'll only consider 6% of the yield when it comes to working out your serviceability.
    Cheers.
     
  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Spot on.

    Cheers

    Jamie
     
  9. Brady

    Brady Well-Known Member

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    For my clients this doesn't hurt me too much.

    OFI with 20% loading makes sense.

    80% for overtime and allowance will have some impact on nurse/care worker who do a lot of over time and paid allowances.
    It's really regular income to them.

    6% max yield will have bit of a hit, not too hard to find 6%+ in Adelaide.
     
  10. kr11

    kr11 Well-Known Member

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    Hi brady. Is the new assessment rate for cba loans 7.25p+i

    Thanks
     
  11. tobe

    tobe Well-Known Member

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    Yes p&i 30 years.
     
  12. RetireRich101

    RetireRich101 Well-Known Member

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    The 6% max yield would put CBA as Granny Flat not friendly category?

    Bank valuation are already conservative on house + granny flat, as fewer comparable etc..

    Even a yield of 8% can be shown on paper, they will only take max 6%
     
  13. WattleIdo

    WattleIdo renovating Premium Member

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    Hi tobe,
    Is this what you posted when I said I understood? It seems to be completely different.
    This comment brings me back to my initial question.
    Surely a higher yield (within reason) is a lower risk. And postcode assessments would be brought into play for the argument on capital gain?
     
  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    That's right. It's pretty lame.

    Cheers

    Jamie
     
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  15. Tim86

    Tim86 Well-Known Member

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    See this is where my investment strategy of getting 10% plus yields out of my properties falls flat. I should be aiming to make less money from my ip's to keep the banks happy.
     
  16. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    The banks are perfectly happy for you to get 10% yield, they just won't use it all for serviceability.

    'Aiming' to make less money makes zero difference to the bank, but it will make a big difference to your actual, real life cashflow.
     
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  17. Redom

    Redom Mortgage Broker Business Member

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    Not all lenders cap rental incomes, although most will take a portion only if its from serviced apartments or the like.

    You can definitely still benefit from higher yields and if your looking to stretch a portfolio asset position from average incomes, it is one way to stretch out your borrowing wall (or anything related to increasing income that can be used by a bank).

    Cheers,
    Redom
     
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  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    worse though, for those with rental incomes > than net PAYG, rental reliance as a PC excuse is making a come back big time.

    few weeks back we had a deal where the it would work fine if the client would have 20 % less rental income and would be neg geared...................but Because Net rent >net payg, pls come back when you are neg geared :)

    ta

    rolf
     
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  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    That is the most freaking ridiculous thing i have ever heard.

    WBC, yes?
     
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  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    yes, but the stoopid gold medal doesnt stop with them :)

    ta

    rolf