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Forced to go commercial / business home loan

Discussion in 'Property Finance' started by hudbry, 25th Aug, 2016.

  1. hudbry

    hudbry Active Member

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    Hi everyone,

    Really need your thoughts and suggestions here urgently.

    Found an investment property I'm very keen on. Gave CBA the details and got pre approval for it easily.
    I signed the contract and sent back to CBA to get unconditional sorted. They came back saying it's needs a valuation done on it (which I expected). No problem, everything moving forward nicely.....
    We exchanged contracts today, putting down the 0.25% holding fee only to get a call from CBA saying:

    "Due to there being 5 dwellings on the title it will need to be referred to a business banker."

    I'm gutted.

    My residential mortgage man at CBA couldn't shed any light on what this means to me as an investor bit says that the finance process will have to start again. If this is the case then my 5 day cooling off period won't be long enough.

    Can anyone give me any advice at all?

    Some of my burning questions:

    - is there anything I can say to CBA to make them rethink keeping it as residential. Any alternative approach I can take with them? It's one block which has two main buildings, separated into 5 units. It's not Strata divided either.

    - if the only way to go is business, what does that mean? Higher rates? At the moment I'm with the wealth package and get a decent discount on residential. Will I still get the discount? I also wanted an offset account running alongside the home loan. Can i still get an offset account with business?

    I look forward to hearing your answers and any further suggestions you have.

    Many thanks.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This is pretty straight forward. Most lenders will have limits on the number of units on one title that they will lend to under residential terms. With CBA it is 4 I believe.
     
    TaylorChang likes this.
  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    All lenders have a cap on how many dwellings they will accept on one title. CBA is one of the best (in terms of the number of units they handle) at 4 units.

    Options are RAMS on a case by case basis max 70% LVR or Suncorp commercial (servicing is very conservative though) 4.29%, no val fees, just an establishment fee of $800 and max LVR of 70%.

    Macquarie commercial will also do this as a retail product (resi). We did a 12 pack recently at 4.40% and $1k establishment fee. LVR 75%.
     
    TaylorChang, Jess Peletier and MTR like this.
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    With commercial/biz lending, you'll be looking at around 70% LVR most likely. Do you have enough deposit to cover that?

    Rates will likely be higher than normal too, but the biggest hurdle will definitely be the larger deposit required for commercial lending.
     
  5. hudbry

    hudbry Active Member

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    Thanks very much for that.
    Much appreciated.

    Are there any lenders who will do 5 units on one title? Any experience in this?

    I've got the deposit but really don't want to be putting down a 30% deposit. Ouch!!

    Any other options at all available to me? Please!?
    :)
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Put down 40% ;)
     
    Colin Rice likes this.
  7. Rayan

    Rayan Active Member

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    What if you are happy to put down 30%, but don't want a yearly review. Are there any commercial loans which act more like resi loans in that regard? And are all commercial loans 15 year terms or do some lenders provide 25 to 30?
     
  8. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Yes - there are a few lenders which will do 25 or 30 year terms, 5 years IO, no reviews and competitive rates. You need to tick the right boxes, amount of borrowings etc but it's certainly possible.
     
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Surprised (but not really) that a CBA staff member does not know that the policy is limited to 4 on 1 title for resi. A quick phone call to credit would have confirmed this. You need a broker not a bank staff member!

    I went into CBA on Monday to rejig some loan splits as I was passing by, thinking it would be an easy fix at a branch level and save me some time and paperwork etc. Was told its a full application by a lender, which is incorrect. Its a 2 page tick and flick document which I will do myself. This sort of stuff happens all the time with clients so we discourage them from going to bank branch's.
     
    Last edited: 26th Aug, 2016
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  10. hudbry

    hudbry Active Member

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    You say they are ONE of the best......
    In your experience are there any lenders out there that will do a residential home loan on 5 dwellings?
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Rams is one.

    Shahin has written a few posts on this topic.
     
  12. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    If you need the longer loan term for servicing you can look at Adelaide Bank, they will do a 25 year loan term at 75% LVR. The rates aren't as good as Suncorp/ING/Bankwest/Macquarie, but will be lower than CBA.
     
  13. hudbry

    hudbry Active Member

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    Thanks for this.
    I've contacted RAMS and am waiting to hear back from them re: residential home loan.
    I gave them the details of the purchase (5 units on 1 block), and what I wanted (IO with offset, 90% LVR etc etc) and he seemed to think that this won't be a problem.....
    Unlikely???
    I'm not holding my breath, and partly expecting them to revise what they can offer me, but here is hoping!!
    If they come back with no, then is there any way I can get a 90% LVR on this sort if purchase?
    Cheers.
     
  14. tobe

    tobe Well-Known Member

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    Unlikely at 90% with rams or anyone else. 70% would be a good result. Best of luck
     
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  15. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    I hope I am wrong but I don't think the guy at RAMS knows what he is talking about - their black and white policy is max 4 units so with a strong application and a lower LVR you will be able to do 5 units. LMI and 5 units and just a no go unless you are Rick James.
     
  16. hudbry

    hudbry Active Member

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    My gut instincts says your are right Shahin.
    He was all pretty confident at the start but when I recently asked him, he said it was with the lenders mortgage team to make a decision on. He sounded less....... Shall we say confident!
    Can only live and hope I guess.
    Will keep you posted.
     
  17. hudbry

    hudbry Active Member

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    Well, I have heard back from RAMS and as promised I would keep you posted.
    As expected the LMI team didn't like it, but RAMS themselves did, so they have given me conditional approval for 80% LVR subject to valuation.
    It's not what I was hoping for, but is a much better offer than CBA and better that 70% LVR.
    Just got to hope that the val comes back ok.......
     
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  18. Peter Taffa

    Peter Taffa Active Member

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    Cooma?
     
  19. hudbry

    hudbry Active Member

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    Cooma? Afraid you have lost me there.
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Nor is it your worst fear ...........

    ta

    rolf