Heritage Bank - Not accepting Commission as income

Hi Guys,

I am currently obtaining pre approval for IP2 and my broker has mentioned that Heritage will only consider commission for owner occupy.

Any brokers out there that could shed some light?

To give you an idea PPOR is with Heritage IP 1 Westpac. Half my wage is commission based however my last 4 years has seen consistent earnings in the same job.

I am not really bothered who the loan is placed through I just thought it was strange given commission is a big source of income for people out there in the sales industry etc.

 

Im taking a wild guess by saying that with those lender selections you are rate chasing. There is nothing wrong with that per se but would recommend you take a more strategic approach.

Have you considered Heritage's cash out policy? Servicing/Borrowing capacity? Will you still service the debt with Heritage in 12 months time when you go back and try and extract the equity?

Most lenders will take 80% of the commission income provided that you can show at least 3 months YTD figure which in your case you can. There are some lenders such as ING that will take 100% of the income but their servicing calculator is conservative and their cash out policy (which arguably I think should be number one of any aggressive investor's list of loan requirements).

Other than rate - are there any other specific reasons you have been recommended Heritage?

 

HBS + property investing rarely go together :-(

Shahin's post is a good one - please take notice.

Cheers

Jamie

 

ING don't take 100% anymore either - changed recently but I only found out b/c I called them to confirm if they were still doing 100%. They just sneakily decided not to tell anyone

Some smaller lenders do take 100% - Firstmac is one that will, but as pointed out these lenders aren't always great long term.

If your broker is recommending based on rate, you might find yourself stuck in the near future. Chat to someone who understands portfolio building and can help you manage the financing risks - this includes the cash out side of things, but also IO extension, valuations, ability to debt recycle and so on.

 

Thanks for the response guys, Even at 80% I know I will not have any issues with servicing.

As far as lenders goes I am not fussed on rate in particular but rather the overall package with building a portfolio etc.

I just found it odd that they would not consider any % of my commission.

 

Hertiage have a few quirks, but recently most lenders are tightening up on uncertain income like commission, bonuses etc. Taking none is a little extreme though, I agree!

 

If you want to build a portfolio, which it looks like you do,I would speak to a investment focused broker like @Jess Peletier who has replied above. She will get you on the right path sooner rather than later. Choosing the wrong lender at the wrong time can have disastrous consequences and can be very time consuming and expensive to fix. Do it right from the start so you can maximize your chance to grow.

 

Reigniting an old post, my broker has advised that Heritage's servicing calc is one of the best out there at present, and they're one of very few (if not the only one) that will allow me to cash out/borrow more.

Any of the brokers on the forum disagree?

 

Me. Lots of lenders still do cash out. There are semantics on whether they do it without evidence, few lenders do cash out over 80% without a pretty solid explanation/evidence of what the funds purpose is.

If you need to double check your brokers recommendation here, why are you still using them? You obviously haven't been able to build trust, which is pretty much a prerequisite imho.

 

Because there was an assertion in the trail that they were investor unfriendly. Recent confirmation with Heritage(and the broker) seems to be contrary to this.

And just to add, I have knocked on EVERY lender's door prior to this.

 

if you had knocked on every lenders door, you would know whether heritages cash out policy was the best or not?

There's quite a few brokers here who specialise with investors and they avoid heritage for the reasons already given.

 

There may be something very strange in your circumstances that means Heritiage are the only bank that will allow you cash out, but for the life of me I can't think of what that might be.

Every lender has a cash out policy. Some are more restrictive than others, but some of them are quite good.

I can't say that the Heritage servicing policy is one of the best either. It's fairly mundane for the most part and doesn't really stand out at all.

 

Not sure Peter but I've failed with all lenders except Heritage. I should know, I've sought a couple of brokers on the forum to confirm my situation and all have come to the same conclusion.

That aside, would you guys consider Heritage to be a less onerous/eyebrow raising lender than say, Liberty to have on my books?

 

Heritage prefer mum and dad home loans for owner occ. Once you start talking cash out for IP you can almost watch their eyes glaze over in front of you.
Good for easy stuff, but once you start trying options that are not so straight forward it gets difficult quickly. Just my experience from 10+ years with them.

 

Liberty is less onerous or eyebrow raising than you might think. For IP number 2, they've actually got a fairly reasonable deal IMO.

I know that in the past lenders have looked at them and asked why people needed them in the first place. For the average investor it hasn't been a big deal in my experience. If lenders get more generous as economic conditions strengthen and they want to get investor business back in the future, I suspect mainstream lenders will be much more understanding of investment loans with non-conforming lenders.

All that said, they're not the only game in town. There other others.

 

OK broker made an error in calcs. Am dead in the water (again)

 

Sorry to hear it, mate

You can't pass servicing with any lender?

 

No - and I've tried EVERYONE.

 

You can't have tried everyone! What about the private lenders? There are hundreds out there.