Intriguing learnings from an interview with John Manciameli (mortgage broker of 20+ years)

Hi PC,

Recently I watched this interesting interview with our good friend PK Gupta and John Manciameli (mortgage broker of over 20 years, featured on Sky News etc). I found some interesting tips he made, with the timestamp included below. Wondering what are all your thoughts on this? I personally have never heard of some of these ideas on this forum yet.

1. 14:14: Some lenders, if you fix your loans instead of paying variable, will take actual fixed repayments (and not apply a buffer), as they would with a variable loan.
   • I wonder why he talks about fixed rate loans in particular, isn't it the same for IO loans with say, Pepper, where they take actual repayments?
   • Unless there is actually a lender that doesn't take actual repayments except for the case of fixed rate loans, which seems quite unique. What lender would this be?
2. 18:45: Moving in with parents, and rent out your owner occupier premises 'on paper'
   • I'm assuming this means tell that bank you live with your parents, and that your PPOR is rented out, when you are actually still in your PPOR.
   • Not saying I'd encourage this, but curious as to how this actually works? Don't you have to report rental income?
3. 25.15: If your property investment portfolio is positively geared, this lender will still look at your payslips, but it becomes secondary. They will consider you as a 'professional property investor'.
   • Claims that this lender brings back good ol pre-APRA days of property investing, where they'll keep lending to you if you're positively geared.
   • Interest rate is 3.5% (as of Aug 2021)
   • So what is this magical lender...?

 

1 - 3rd tier lenders look at actual repayments with a little buffer. Mainstream lenders all add their 3% buffer.

2- this is looked down on by lenders , yes essentially what you said but using a "Proposed" rental income.

3- untrue, income is income. Infact some lenders don't like it when your rental income exceeds your salary.

 

1) I don't know of any lender that takes actual repayments just because a loan is fixed. Even the most generous servicing lenders still take actual repayments plus a buffer, so maybe that's what he meant, that a lower fixed rate helps servicing in that situation once the buffer is applied. He then covers himself by saying "the lenders I'm talking about may have changed their policy by the time this comes out" hmm.
2) as long as you're happy to lie on your loan application
3) Yes there are some lenders that consider you to be a 'professional property investor' but if you consider the rates are 3.5%+, all of your properties must be positively geared and you need 20% deposits + costs to keep accumulating you will soon work out this is of benefit to only very few property investors. You still need to be working and earning an income. I don't agree it takes us back to pre-Apra days in terms of lending.

 

Thanks for the great insight. Regarding 3) curious to know what lender that would be? And to clarify, every single property must be positively geared, or is it sufficient if your portfolio is overall largely positively geared (i.e. +40k pa).

Sounds like it may be good for people who have acquired and paid down debt and are looking to continue? 3.5% isn't that terrible considering IO at majors is around 3.3

 

Rate isn't the most important when that's the only lender willing to give you the loan.

Im amazed that broker proposed Point 2. Let's just hope bank BDMs and Bank credit managers aren't on here.

 

He covered himself by the way he worded it, "I've heard of some brokers advising people to blah blah blah"

 

My understanding is each property needs to be positively geared
3.5% is the P&I rate.
Needs 20% plus costs (cash) for next purchase or they want to cross secure your portfolio.
There really aren't that many investors that the product suits