Firstmac denying 88% LVR loan due to 'credit score'

Hi PC,

I recently did a loan with Firstmac with the intent of going 88% LVR. Their servicing calculator suggested that I could service the loan ('pass'). However, upon application, Firstmac came back and said that for me to meet 'Firstmac's credit score', the loan amount had to be dropped, leaving me about 10K short (luckily I had an excellent broker who pushed for as much as he could - their initial offer would've let me around 25k short).

In the end, 10K no big deal, and not much more could've been done anyway. But left me very curious and was wondering if anyone had any insight on what's going on here?

I regularly check my credit score with multiple different agencies, always coming back as 800+ (or whatever score the 'excellent' category is, depending on the agencies). Never missed a single repayment, always on time. Broker says he's suspects it's because I'm a young male that the credit model is deeming it as risky. The other thing I can think of is there's been a lot of activity on my credit file. I just purchased a property last year, refinanced the loan to another lender after 6 months to pull equity, to use for this purchase with Firstmac.

Also curious because I'm confident I can re-val this property to under 80% LVR soon, and continue accumulating with another 88% LVR loan, but I don't want to face another short fall situation...

 

Does feel that way BDM probably doesn't even know what's behind the black box

 

This is happening a lot....particularly when there are lot of hits to you credit file.

Have you shopped loans? Have applied for loans with multiple brokers and/or lenders?

Banks are getting more and more risk averse.... i see credit tightening increasing across the smaller lenders also....the Big 4 are already tight.

 

Always been with the same broker, never shopped around (i.e. even for 'pre-approvals'), only applied for what I'd need (and what the broker says we'll confidently get). But I have done a fair amount of loans/refi lately as I'm trying to accumulate quickly. Previously had a low limit credit card which I closed for more loans

I guess a lesson that lenders can view your credit file very different from the credit agencies. I always thought my 'credit score' was as good as you could get

They could also be using that as an excuse for who knows what

 

Yes some lenders don't want too many investors or don't want properties in certain areas.

This is why I tell people make sure you have an exit plan and leave some money in the tank for refinancing.

I am seeing a lot of people jumping on Liberty and Bluestone. Not a good idea. Big stretch between Pepper and these.

 

System declined if credit score is below 650 from what I've been informed.

 

It’s likely the high ltv that’s part of the problem, if portfolio building and looking to maximise, you’ll benefit from accessing as much bank flexibility as possible. <80 ltvs and things get easier.

 

It was using Firstmac's in-house lenders protection fee

 

I thought Firstmac usually push their in-house LRF fee as a 'perk' of going with them, given it's a much lower cost and you don't have the hassle of dealing with a 3rd party, so this option would be preferred?

 

Personally I would not use Firstmac. Another one to give a miss.

I don't know why brokers recommend but I suspect they pay a decent.

The other one to avoid is CBA.

 

Thanks Rolf, that's great insight. Would it also be fair to say using LRF for Firstmac while you can may be a good idea to save your applications for Genworth/QBE for lenders that don't have their in-house LMI? For example Resimac or Pepper. As I understand, you can only do LMI with Genworth/QBE a couple of times before they stop giving it to you

 

What's wrong with Firstmac and CBA. CBA are quite genrous with there desktops evaluations, so i did refinance wtih them to pull as much equity as i could from my unit last year. What are the best non APRA goverened lenders you would go with these days? @sash

 

What interest rate do Pepper do for 90% LVR?

I noticed their 'Essential Prime' product allows for up to 90% LVR but I can't find their rates publicly available.

https://www.pepper.com.au/siteasset...duct-summary-direct-essential-17112020-v3.pdf

They only list the rate for up to 75% LVR

I recall previously seeing it as very high though