ING - No more cash out ( ON IP) and no more discounts and max Rent

A few changes with ING which i will summarize....

1. No more cash out for property that's secured against an IP

2. Max 70% of gross rental income taken for servicing

3. No more discount for NEW investment loans ( so rate will be from 4.72% @80 LVR)...existing are not effected

4. Old ....but max 80% LVR for NSW IP


NOTE: Cash out is the next one to go with most banks...so take out what you can especially on your IP.

 

Interesting they are restricting debt consolidation for owner occupiers as well. The only equity release they will do is for home improvements for ppor properties.

This is new.

 

Mick 1. - do you mean no equity releases for IP

 

Yep - basically no cashout for IPs.

Cheers

Jamie

 

I'm slightly confused.

Right now I have 3 accounts

Orange Everyday - regular transaction account
Orange Advantage 1 - PPOR loan which the Orange Everyday is an offset for
Orange Advantage 2 - IP Loan, current owing is something like $290k, with available bal $18k

Are you saying I can't "withdraw" this $18k and use for further investment?

I'm obviously not talking about an equity release, it's available from the account...

 

No more cash out ( ON IP)

This is really biggg. I just hope other lender doesn't follow this..

 

It may mean you have to keep jumping between different banks to release equity.

 

This increases risk, it doesn't diminish it. These policy makers are clueless. YES someone could cash out and blow it on stupid things, but stupid people are doing to do stupid things with their money anyway. Why take away this safety net from responsible investors. Sigh.

 

How is this so?

 

When you hear of people going bankrupt, have you ever heard the saying "he was asset rich, but cash poor"?

If you're stretched but have a portfolio that's doubled, that's all well and good but the money is "stuck". If you hit a rough patch, ideally you'd have access to some of that equity to keep the lights on. Imagine having $1m in equity, but losing it all (or being forced to sell at a bad time) because you couldn't pay a few thousand dollars in interest. It's never a bad thing to have too much liquidity. By preventing people from being able to access this equity, as I said it only increases risk, it doesn't diminish it.

 

I don't think you will have a problem 'withdrawing' this $18k that is currently sitting in a regular transaction account that is offset to your IP Loan.

Whether you can use this $18k to buy another IP investment is an another question, as it is subject to today's borrowing conditions.

Over my dead body, if Lender can stop/influence the money you can withdraw form your offset/transaction account, but Banks seem to make the rules as they go along...

 

Thanks.

I agree it increases risk to the individual but I have my doubts that this scenario outweighs the systematic risks of private debt growing at the pace it has been.

It does strike me that all these moves by APRA have the risk of being pro-cyclical and if the risks are real they may have left it too late.

 

It won't impact on your redraw - you can pull that out BUT if you wanted to set that $18k up as a new loan split for taxation purposes they'll prob say no.

 

That's the problem when you overstretch yourself without a proper backup plan.

Oh boy it's gonna end in tears.

 

This is further evidence that smaller banks are reacting to the APRA 10% threshold. APRA data shows ING has about $9bn of investment loans but is not growing above the 10% limit.

Their move looks like preemptive action to avoid a flood of applications as investors seek loans from smaller players in response to the majors throttling back.

 

Haha - there will be no rush - no-one with more than 1 IP would service

 

I think TKC is over reacting more than APRA.

 

OmG the sky is falling.

 

Can't you just pull the money out and say you are doing it for a reno or something else, even with a loan split set up. How do they know you'll use it for an investment property if you tell them something else?

 

Thanks but that's not what I said. The $18k is not in my Everyday "offset" account. It's just there available in the IP Loan account.

Thanks Jamie, this clears it up for me for sure.