Has anyone else experience this with St Georges?

St George rejected our loan application (refinance of 1.8m) based on serviceability.

Our credit history is excellent, we don't have any bad loan.
The application was endorsed by lower credit officer but when it went to higher credit officer for final approval he/she rejected it.
They ignored the HEM, they ignored the expense sheet given by my broker. Instead they looked at my expenses from bank account (my everyday banking is also with st george).

My broker says it's one off case they are looking at actual bank transactions to determine expenses. They picked the wrong customer to set an example. If they do it for all applications they receive, not even 5% application would qualify.

Broker also suggested they did it because our portfolio size is 6 properties (6m bank val approx) so bank treats these kind of customers differently in order to minimize their risk.

We wasted so much time with st. george (also probably some enquiries on our credit file) that too for a rate of 4% (Investment, P&I, Variable, 80% lvr) that st. george offered us.

I know there are other lenders offering as low as 3.27% (Investment, P&I, Variable, 80% lvr). But my broker and I are kinda lost and not sure where to go. We might try macquarie.


Any advise?

I can give you details of our scenario, please PM me.

 

I have had similar experiences and moved banks as a result - their processes are not up to the same standards they once were.

 

You and your broker need to get to the crux of why it was knocked back on serviceability. If your actual expenses in your account are higher than declared then what is the narrative and how was this explained to the lender? St George has recently changed the way they assess living expenses, was the brokers assessment of living expenses in line with this change?

I'd suggest you're going to need to look at a NAB or CBA rather than Macquarie. Generally speaking their serviceability isn't any better than St George particularly for investors.

 

I have found most lenders are carefully looking at expenses on bank statements now

 

Sounds to me like you need a new broker who is actually up to speed with the banks constantly changing internal rules.(Isn't that why you are using a broker in the first place?)

 

Macquarie have a policy around multiple investments that means you’ll be rejected there too. So that’s a bad idea.

Get a plan, do one at a time, stand alone. This isn’t about rate, it’s about structure and risk management.

 

We are not refinancing all properties. Only 2.
With st george we negotiated to refinance only one but still they refused.

Currently we are paying 4.37% with latrobe. (2 properties $1.8m).

 

Broker says, bank gave him a calculator which meets the servicing. Same calculator was used by lower credit officer.
But the higher credit officer discarded it and used his own method to calculate serviceability.

As per my broker there is nothing he (or any other broker) could do.

 

macquarie offers lower rate if lvr is less than 80%. Considering all other factors same as st. george, this alone can improve serviceability.

also, considering lower rate offered by macquarie (3.6%) would help narrowing the serviceability shortfall.

 

credit assessors don't just create their own methods to calculate serviceability.
The assessor has probably put different living expenses in the calculator to reflect the act living expenses - which is what is supposed to happen.

 

Sounds like you've got all the answers already... or was that your broker's advice?

One question then... what percentage does Macquarie shade rental income by and how does that compare to St George as an example?

 

This will likely be because of your investment portfolio.

WBC group, until recently, wouldn't account for individual property expenses properly (like most lenders) and include part of the expense in the rental income shading. Now they have a specific expense line for individual property expenses, that fall OUTSIDE HEM specifically. I.e. its just a direct hit to your serviceability.

You have 6 of them. Add ~2k to your monthly expenses as a minimum to account for your large portfolio.

This hurts serviceability a lot and is a relatively recent change. Their credit team is pretty sharp, so they've caught on and rejected the loan based on serviceability. Note that the marginal rate difference won't do very much at all to your serviceability - that is very small difference between the two lenders.

Macquarie are pretty particular on expenses too. Noting what you've just said, I wouldn't take it there.

And yes, there'll be plenty of people bitten by this change around now. Its not a small one. Its big with WBC and impacts investor portfolios significantly.

 

You are on the spot @Redom
Do we have a chance with any other lender?

 

Is this change (including direct property related costs) across the board with all banks?

 

The serviceability shortfall of 13k is very small compared to total income. It's a borderline case.

Total income is almost $700k per year (payg contractors both spouses + rental from 6 properties)

Minus:
- only 46 weeks counted towards serviceability.
- Rental property expenses. (Repayments, vacancy, management fee, insurances, landtax etc.)
- Living expenses including the rent.

 

With $6M worth of property the land tax showing on your bank statements would have been the issue?

May need a lender with more generousness servicing? Resimac at 3.46% P&I or 3.66% IO might be a fit.

 

The reality is that even if lenders don't ask for transactional statements, if they have access to them, they will look, they will analyse, they will take actual spending, not your declaration.

I've had similar situations with St George (Bank of Melb) where the credit officer supports the application, the senior credit officer gets picky and pushes it back. The deal goes nowhere for weeks and ultimately doesn't get funded.

Macquarie have fairly simple and limited documentation requirements. On the surface they look good, but they are conservative by nature, it would be risky.

Resimac is probably the better solution. They have their own quirks, but you're more likely to get the loan approved.

 

I just got off the phone with credit officer at "Well Balanced loans". He calculated our serviceability and confirmed he can do the deal @3.27%.

Does anyone have any experience with this lender?

 

No such lender according to google