Investor Friendly Banks

'Pulling equity' is essentially borrowing more money against the value of your property. Any time you borrow money, you've got to demonstrate the serviceability to afford what you're borrowing.

 

Thats an issue hence might look into SMSF to nuy an overseas property (personal.reasons and no rent will.be coming)

 

is it true that Non-conforming lenders ex Bluestone won't look at the investors who has 3 or more properties ?

 

Bluestone does have a restriction around this, but there are ways around this limitation if you've been using trusts.

 

Pepper - about $300 for vals, 1000 for establishment. Are pretty good to deal with. A lot more generous. I feel they are better than some of the majors. Also rates are about 0.3-0.4 more for interest only loans. These guys are pretty much mainstream now as they do white label products - i.e. repackaged products.

Liberty - will charge about 1.25% of overall loan. Better to use these guys for short term loans. Some other fees.

 

Pepper actually has had cheaper interest rates than Westpac lately.

 

LVR?
IO or P&I ?
Investment or Owner Occ?
Offset Account?
With pricing discounts Westpac are coming in cheaper than Pepper for most.
Pepper are more flexible regarding borrowing capacity and policy

 

Thats good info- thank you.

Why does there appear to be a big of stigma towards these lenders?
Is it just their smaller size or is the customer service really that bad?

 

Mate reckon most of the brokers have very little experience with these guys.

I have used Pepper and they have been excellent for construction loans. Their service is better than any of the Big 4! They even call when there is a delay!

Latrobe are expensive and you have an exit strategy with them. I know someone who used them and they are quite responsive also. They are not as black and white as the majors.

 

Usually investor friendly means borrowing capacity & price. Both of these parameters are getting more competitive, with more and more funders and more funding from those funders available to service this market.

2020 will see more and more lenders enter the 'investor friendly' space with suitable products that are becoming very competitive. Largely the funding market for this type of lending has widened, with some of the biggest asset managers in the world taking over a number of the non-banks that specialise in this space. Resi investors will see the fruits of some of this institutional action in 2018-19 come 2020.

E.g. you can get rates from bluestone <3.5%, pepper < 4%, Liberty <4.5-5%, etc. The spread between the non-banks and the rest of the market has tightened, and in many cases, doesn't exist!

Each of the lenders have some product quirks:

- Resimac would be the best of the lot IMO, rate wise their the cheapest. The 'investor friendly' only goes so far, as they're calculator has quirks to its negative gearing add back rather than actual repayments on OFI debts that others have.
- Firstmac and Resimac have comparable quirks in their calculator.
- Pepper has been in this game for a while and now makes up a large section of their growth. Good products, fast service, construction allowed (big one!).
- Bluestone are the new player following takeover. 4 property restriction.
- Liberty have been servicing this space for a while. More expensive usually, but low LVR loans are OK.

Overall, the deepness of this funding market is very very useful for:

- Advanced investors who are now looking for 'lifestyle' and want to upgrade their own home or want some flexibility for an owner occupier loan. We found in 2017/18/19 some very well of investors were being flexibility squeezed to make adjustments to their situations because of servicing calc and product cost.

- OO loan rates are sharper than big 4. There are 85% no LMI options, even 90% no LMI from Bluestone for specific cases (much higher rates of course).

The general summary of this market is:
- More options have come in & more funding is available.
- Competition is providing legitimate options.
- Those seeking to: extend IO periods, adjust PPOR's, access equity, etc....should have options in this space, at far better terms than any time before from these non-banks because of the above two!

 

In many respects their smaller size is a benefit and their service is reasonably good.

Historically they've been catering to non-conforming borrowers (credit problems), they've generally been quite expensive. Hence a mainstream borrower would be insane to use them.

Over the past 5 years or so, they've found an additional niche in mainstream borrowing. They're not a balance sheet lender so their regulatory oversight isn't as strict as other lenders. They can have more relaxed affordability policies. Many of the third tier lenders have pushed heavily into this space.

In many cases they're still generally more expensive than the mainstream, but they do have some benefits that might make them more suitable for some borrowers.

I'd categorise the third tier lenders as higher risk than others. They're less likely reprice existing loans as they get less competitive. They're also more likely to have funding problems if we see another economic event like the GFC.

 

I appreciate the response guys. I wouldn't be afraid to use them on my next purchase if the numbers makes sense and they get the deal done! Cheers

 

I saw a Heritage Bank advertisement on PC attracting users....


Below link talks in generic terms but still keeping Tier 2 as a valuable option

Big banks vs 2nd tier lenders for home loans