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

Discussion in 'Loans & Mortgage Brokers' started by HonestShiba, 20th Mar, 2022.

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  1. HonestShiba

    HonestShiba Well-Known Member

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    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...
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    It's simple - they can do whatever they want.... :(

    The Y-man
     
  3. HonestShiba

    HonestShiba Well-Known Member

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    Does feel that way :confused: BDM probably doesn't even know what's behind the black box
     
  4. sash

    sash Well-Known Member

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    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.
     
    TheRons likes this.
  5. HonestShiba

    HonestShiba Well-Known Member

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    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
     
  6. sash

    sash Well-Known Member

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    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.
     
    The Y-man and HonestShiba like this.
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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

    Redom Mortgage Broker Business Plus Member

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    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.
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Do you know if the loan was Mortgage insured, OR did Firstmac use their in house lenders protection fee ?

    ta
    rolf
     
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  10. HonestShiba

    HonestShiba Well-Known Member

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    It was using Firstmac's in-house lenders protection fee
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Tends to suggest that the deal wasnt amenable to Genworth, so lucky you got what you got I suspect

    ta
    rolf
     
  12. HonestShiba

    HonestShiba Well-Known Member

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    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?
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Most of the IP loans we have done with FM have been externally insured I recall.

    Recently had a few that we could get through either Genworth ( dti) or QBE ( too many IPs) and the fall back there was LRF.

    I suspect, but not sure that only a portion of their book can be internally insured as part of their funders deeds.

    YEP LRF is less than the market LMI, but is also limited in location and max lend per security

    ta
    rolf
     
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  14. sash

    sash Well-Known Member

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    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.
     
    bamp likes this.
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    FM fits a servicing gap between APRA lenders and the likes of Pepper, especially so for IO investment loans > 80 %, and where DTI is > 6, so are the best place for a portfolio builder in that position, all else being equal.

    ta

    rolf
     
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  16. HonestShiba

    HonestShiba Well-Known Member

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    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
     
    Investor1111 likes this.
  17. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Pepper is a no no for lends > 80 % using their high borrow cap Pepper Funded product ( huge rates ) Resimac is an option that sometimes fits in just between the APRA and the Firstmac gap, but really comes down to the actual transaction and client goals.

    Have never requested a specific insurer from Firstmac, so dont know if that works.

    ta
    rolf
     
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  18. Investor1111

    Investor1111 Well-Known Member

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    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
     
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  19. HonestShiba

    HonestShiba Well-Known Member

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    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
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    3.99 for IO

    used to be higher

    ta
    rolf
     
    HonestShiba likes this.

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