Join Australia's most dynamic and respected property investment community

Having trouble with next loan approval

Discussion in 'General Property Chat' started by Scott Townsend, 14th Nov, 2015.

  1. Scott Townsend

    Scott Townsend Active Member

    Joined:
    16th Aug, 2015
    Posts:
    39
    Location:
    Perth
    Hi guys

    Ive just been to the bank to ask for some more $$ to build my secondary dwelling on an IP in QLD.

    My situation:

    PPOR here in Perth value $540k monies owing $430k
    IP1 Sunshine coast value $370k monies owing $326k
    IP2 Kingston (where I'm building the secondary dwelling) value $300k monies owing $255k

    PPOR and IP2 are in my name and IP1 is in both mine and my partners name. So the bank asks what rent is coming in for all properties and potential rent of secondary dwelling, which is very well positive cash flow overall, however for IP1 the bank hold the full loan to me but only half the rent due to it being a joint ownership.

    Bottom line is they won't lend me the money even though all I want is $150k which is going to create $300 pw rent.

    The only way around it from the banks point of view is to have all the properties in both mine and my partners name and to be borrowing with 2 incomes to increase borrowing capacity. However i believe there would be stamp duty costs incurred??

    Apologies for the long post but has anybody been in a similar situation or would know a straight forward, more cost effective way around this problem?

    Thanks
    Scott
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,589
    Location:
    Adelaide, SA
    Problem 1, going to a bank instead of a broker

    Problem 2, buying stuff in joint names. There are 1 or 2 lenders from memory who get around this issue. Otherwise, perhaps get advice on transferring it to one or the other.

    Where do you plan to buy?
     
  3. monalisa

    monalisa Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    314
    Location:
    Sydney
    Have Scott

    Have you looked at refinancing the Kingston Property?

    What will the end value of the Kingston property be once the granny flat goes in?
     
  4. Scott Townsend

    Scott Townsend Active Member

    Joined:
    16th Aug, 2015
    Posts:
    39
    Location:
    Perth
    Yes, the reason I went to the bank is because my current loan for kingston is with them and was hoping to re finance the Kingston property.

    The end Value of the Kingston property should be $450+ in the current market yielding around 7%
     
  5. monalisa

    monalisa Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    314
    Location:
    Sydney
    Worthwhile looking at the portfolio as a whole, and then deciding if there are better options or servicing with other lenders.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,563
    Location:
    Sydney or NSW or Australia
    Are all your properties with the same bank?
     
  7. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    641
    Location:
    Sydney
    Check your servicing with other lenders to see if you can service the additional debt using just your income.

    Failing that you can add your defacto partner without having to add her to the title. Lenders only accept this in spousal or defacto relationships. The con with this option is that it will affect her servicing moving forward.

    Just make sure the first option recommended works before you go onto the second option.

    Which lender are you dealing with?
     
  8. Scott Townsend

    Scott Townsend Active Member

    Joined:
    16th Aug, 2015
    Posts:
    39
    Location:
    Perth
    Thanks Shahin

    Yes our PPOR and IP2 are with Bankwest in West Australia and IP1 is with Macquarie bank.

    We used a broker for the Bankwest loans only to find out later that Bankwest are not a very good/helpful bank when it comes to investing, especially in other states. I believe the broker may have been biassed to Bankwest for obvious reasons..
     
    Tekoz likes this.
  9. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    641
    Location:
    Sydney
    Bankwest is one of the most conservative lenders when it comes to servicing and the larger your portfolio the more its going to hurt.

    Get the broker to run the numbers using more generous servicing calculators such as NAB, Homeloans Ltd (Pepper Product) and Liberty (highest servicing lender out of all them).

    I would leave your partner as an ace up the sleeve - one use her when you really need to (no funny jokes please).
     
  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    Or perhaps St George, they will count the joint IP as only your half rather than the full loan.

    There won't be stamp duty payable if you do need to use your partners income, but as Shahin said, best to try to go it alone if you can.
     
    Tekoz likes this.
  11. Scott Townsend

    Scott Townsend Active Member

    Joined:
    16th Aug, 2015
    Posts:
    39
    Location:
    Perth
    Thanks very much guys.

    So are you saying to take out a loan from another bank to build a dwelling on the property in which is being serviced by Bankwests loan? I would have thought that would not be possible?

    Thanks again
    Scott
     
  12. monalisa

    monalisa Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    314
    Location:
    Sydney
    Hi Scott

    I think you will have to refinance the property altogether - check servicing and valuation shop with other lenders.
     
  13. Nimble

    Nimble Well-Known Member

    Joined:
    3rd Nov, 2015
    Posts:
    52
    Location:
    Australia
    Reducing your credit card limit will allow you to borrow a bit more. Banks perceive whatever your CC limit is as if you already borrowed it all, even if you don't have any debt on the card.
     
  14. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    It's not possible, you'd have to refinance the IP in question. But unless you're on a fixed rate or have paid huge lmi, it will likely be worth it - get a better loan and ditch BW while you're at it.
    Are you x-coll?
     
  15. Richard Williams

    Richard Williams Buyers Agent - Southeast QLD Business Member

    Joined:
    9th Aug, 2015
    Posts:
    471
    Location:
    Loganholme, Brisbane
    Yeah, go St.George and be prepared to wait many many months.....! :eek::eek::eek: What did they get up to, 8 days waiting per query...?
     
  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    I dont know what those obvious reasons are in your case.....................

    usually there are 2 why peops have used BWA

    1. They used to capitalise LMI above what every other lender would
    2. They have a very low rate, commonly a bait rate

    Typically, but not always, the use of a lender like BWA is due to a ( wrong !) broker perception that a borrower better get the lowest rate a lender, otherwise the broker isnt adding value.

    More common as well where one uses a broker that doesn't have the right posture, and rather than confront the "wrong" stated client needs, the broker is a "doormat", and does the borrowers whim.

    We teach, best to walk from business where a broker cant convince a client of the right lending strategy and product mix.

    ta
    rolf
     
    monalisa, MsAli, Gingin and 1 other person like this.
  17. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    Not sure, I don't use them much for various reasons, but like most lenders they have their place. Often lenders times blow out when they offer a good deal - St G has/had some attractive rates and incentives recently and often lenders don't have the manpower to deal with the added volume.
     
  18. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,148
    Location:
    Canberra and Sydney
    Bankwests servicing calculator is the issue here - a refi to a more generous lender (nab, advantedge, etc) would enable you to borrow a lot more by the sounds of it.

    Cheers

    Jamie
     
  19. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    Could also be that granny and bwa aren't thta good at higher Lvrs

    If the op expects 450 val in thta burb will be hard to get comps as well, but that will apply to any lender.

    Many lenders will do grannies to 90 some more

    Ta

    Rolf
     
  20. 1stepcloser

    1stepcloser Member

    Joined:
    4th Jul, 2015
    Posts:
    22
    Location:
    Perth
    Hi there,

    I went halves in my PPOR with a mate waiting to buy him out, last year I wanted to buy another IP tried a few banks but because of joint loan they said no, AMP approved my loan.