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Equity release policies - post APRA

Discussion in 'Property Finance' started by wombat777, 25th Feb, 2016.

  1. wombat777

    wombat777 Well-Known Member Premium Member

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    Can any of the brokers give us an update on where the various lenders are now sitting post-APRA as far as equity release policies are concerned. i.e. Max LVR and other key factors they use in the decision?

    I'm currently sitting at about 63% LVR on my PPOR. Aim is to extract 17% equity into a separate line of credit to use for investment purposes.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Easy with the right lender. A bit more tricky with some especially if servicing is a bit tight. Who are you with?
     
  3. wombat777

    wombat777 Well-Known Member Premium Member

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    PPOR loan is with Suncorp. I've just lifted my after-tax income by paying out a car lease early. That should help.

    I also have an IP loan with CBA.

    My broker indicated last year I should move the Suncorp loan to another lender. Will be able to do that from May.

    Intent of the equity release is to fund IP deposits without dipping into my quite healthy offset account.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Only a little more difficultnthan before.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Only a little more difficultnthan before.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    If you're keeping it to 80% or less, equity releases are fairly straight forward with most lenders as long as you meet the servicing criteria.
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Suncorp will go up to 80% without foo much hassle. The issue with them is that their servicing calc is not generous at all - and that's where most borrowers have issues with Suncorp.

    Cba are sweet up to 80% too - and will often lend against a desktop valuation. They're borrowing capacity calc isn't as harsh as suncorps and their policies are less rigid.

    All in all - if you service with Suncorp, doing an equity release at 80% shouldn't be too much of an issue. Your broker can order an upfront valuation before submitting an application.

    Cheers

    Jamie
     
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    there is policy and sometimes wonderment what can happen.....partly that depends on our expectation.


    90% LVR cash out of 540 000 to 2.4 million TAE single security with Worstpac...............

    Who would have thought.

    ta

    rolf
     
  9. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Being a 80% max deal it's a LOT easier, the main tightening has been in the 80-90% range where lenders are showing a lot more scrutiny in releasing funds, asking for evidence etc.
     
  10. joel

    joel Well-Known Member

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    Are there any other road blocks other than needing to show what itll be used for?
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    They may need to to show servicing of the end debt on their calculator, even if you're using another lender which with SC can cause issues b/c their calc is so tight.
     
  12. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Use of funds is the big limiter, but some lenders will restrict what types of things they will allow funds to be released for, cashout amounts, max LVR's etc. For the most part if you have an investment focused broker you can navigate through these hurdles and avoid lenders with needlessly excessive requirements - but it means it's less likely for someone to ham fist their way through their long term finance structuring and not hit some pretty insurmountable obstacles.
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The lenders may also want proof of what it will be used for such as a contract of sale.
     
  14. joel

    joel Well-Known Member

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    Will that affect settlement/processing time if youre using equity as a deposit?
     
  15. wombat777

    wombat777 Well-Known Member Premium Member

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    For this type of equity release for investment scenario, how do the banks typically react to the funds being used for:
    1. IP Buyer's agent fees
    2. Renovation costs, e.g. For a cosmetic Reno and other essential repairs to get an IP ready for a tenant post-settlement

    For my first IP, I did not have access to equity so had to dip into my PPOR offset for IP-related purchase costs. Something I would prefer not to do second time around.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes potentially as you will need money for a deposit.
     
  17. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    It can add a little more time - it's best to not offer a 30 day settlement in these situations, as any little delay can drag the whole situation down. Usually the files will be processed in tandem so there isn't a dramatic increase in time required.

    Generally you would just say that it's for a future investment property purchase, not specifically itemise the use of funds.

    With your situation you've described - I hope you placed the offset funds into the loan account, cancelled the redraw and setup a new loan split for the investment deposit to be released - maximising your deductibility?
     
  18. wombat777

    wombat777 Well-Known Member Premium Member

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    At the moment it is just a plain old offset account against my PPOR variable loan. I have a separate fixed loan against my PPOR that will expire 8 May.

    Yet to see whether equity release will be through my existing PPOR lender ( Suncorp ), or whether my PPOR will be refinanced with another lender.

    Intent is to setup a separate split for investment purposes.