How APRA have changed your ability to borrow

Discussion in 'Loans & Mortgage Brokers' started by Redom, 31st Aug, 2015.

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  1. HiEquity

    HiEquity Well-Known Member

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    Hi redom

    Great thread and excellent posts. A few questions:
    - How are things different in PPOR land? Has nothing at all changed or is APRA having some impact there as well?
    - If there is a decent spread between PPOR and IP servicing calculators, what is there to stop an investor applying for a PPOR loan and then turning it into an IP down the track? Or do the OFI changes impact on PPOR lending too?
    - What about for CIPs? Have servicing calculators changed with APRA there as well or have they escaped the carnage?
     
  2. dabbler

    dabbler Well-Known Member

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    This is exactly what I was thinking, actually a lot of things are not in anyone's interest IMO
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    The servicing has changed for both IP and PPOR, with the main difference being rate and LVR at the moment. CIP hasn't been affected.
     
  4. Redom

    Redom Mortgage Broker Business Plus Member

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    The servicing changes will impact anyone applying for residential loans.

    1. The living expense calculation is generally higher - this applies to both investors and PPOR purchases.
    2. The OFI debt treatment has become harsher - anyone with other properties with mortgages, generally investors.
    3. Interest only calculation - may impact PPOR's, depending on their repayment type.

    Generally though, the impact is most severe for those with more investments - see the last chart, where the 'OFI' part makes the majority of the borrowing power decrease.

    Cheers,
    Redom
     
    Redwood likes this.
  5. blackenator

    blackenator Well-Known Member

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    With these changes I can see also a limit to purchases using LMI. Is their a general rule in regards to purchases with LMI is their a magic number say like 1 million dollars before banks in general stop allowing you to use LMI.
     
  6. Redom

    Redom Mortgage Broker Business Plus Member

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    Can still use LMI in reasonably similar ways to earlier in the year - although there has been 'risk based' tightening around rental reliance from the insurer and active credit histories.

    In terms of exposure limits, they haven't moved. Banks have 'DUA's' at certain limits, that is, they don't need to go to the insurer for approval/sign off so long as their exposure is below a certain amount. Different for different banks. The actual insurer's have stated 'aggregate' exposure limits as part of policy too (about 2.5mill).

    Cheers,
    Redom
     
    blackenator likes this.
  7. AlbertWT

    AlbertWT Well-Known Member

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    Thanks @Redom for sharing the great article.
     

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