IO, 80% LVR, PPOR loans under 4%?

Hi Brokers,

Are there any decent lenders out there still doing IO, 80% LVR, PPOR loans under 4%? Or even slightly over 4%?

Thanks all

 

Yes, but they are likely to go above 4% in the near future. Suncorp 2 & 3 year fixed, 3.79% are very popular at the moment.

 

From my experience Suncorp don't seem overly keen on IO against owner occ :-(

Agree with Simon above - if the IO variable rate is low - check if that lender has already increased them....if they haven't then they probably will soon.

 

Thanks Simon, Jamie, I’ve been advised that I can get IO PPOR from Suncorp at 3.89% which is an amazing rate these days. I will ask if I can lock it in for a couple years.

My biggest concern is the time they’ll take from application to approval. I will most likely buy at auction so no finance clause.

How long do they take to approve a straight forward PPOR @80% LVR loan?

 

You will definitely want fixed otherwise one sneeze and it'll jump 0.3-0.6% up before you know it.

 

Who has advised you that you can get IO on PPOR lending with Suncorp as its as close to impossible as it gets?

Have you submitted an application and credit has approved it?

Suncorp's turnaround times are currently 3 working days (depending on the brokers accreditation level).

 

It is possible to get an IO loan on a PPOR with Suncorp, but it's not easy and it needs to be a very strong application. There's no official rule that I'm aware of, but I have managed it for loans with an LVR less than 50%.

I was going to suggest that ING might be a better match, but they recently increased their IO rates and it's now 4.14%. It's still a good deal though. They're also no longer doing IO PPOR fixed rates.

 

Pre APRA's 30% speed limit - Suncorp had a policy whereby they allowed IO lending on PPOR by exception and side off from credit. You had to provide a solid reason why the customer has elected IO. They wouldn't even consider the "they will convert it into an investment in say 2 years time" scenario.

Post APRA SL it is near impossible getting IO on o/o lending with Suncorp.

You would need to seriously considering fixing and IO rate as they are either increasing or getting banned particularly on o/o lending. The 3.89% would be P&I and not IO.

 

Thanks all for input.

I was chatting with my broker and asked what is the lowest IO PPOR @80% LVR rate was and the answer was Suncorp with 3.89%

Reading the replies here got me worried though.

 

Sorry to jump in the conversation but I'm actually wondering if your main objective when choosing a loan is the rate? Or depending on your journey, the ability to find a bank that will keep lending money when you already have a few mortgages?

While I really like ING for instance, my broker suggested to use one of major banks in Australia with a rate of 1% more than ING because according to him, after purchasing a few properties no bank would allow me to borrow money.

Can I have your thoughts on this? Thx

 

The main objective is going to be who will lend you the money (based on your serviceability, income type, security type, etc) and will continue to lend you the money, i.e. you dont want to use ING if you barely pass servicing and are planning on a re-val and equity release 3 months later.

Then the next objective is going to be rate, ongoing policy (I want to build 3 townhouses in 6 months times, cash out policy, etc).

Rate is of paramount importance when you want a set and forget loan, I dont plan on revisiting the loan for a long time.

 

More than ever in these tighter credit times a good experienced broker is going to be a benefit. Picking the lender based on low rate or speed of approval or some really convenient 24/7 online application could cost you.

Good brokers know all the servicing, valuation and policy issues and steer you around the dramas. What their policy on IO ? Reval / Equity release ?

 

If anyone is interested my broker just confirmed that Suncorp are not lending IO at all

 

I've found that brokers are often behind with policy or what can and can't be accept - at least from my experience on SS and PC in relation to CBA.

 

And I've found vice versa. Writing a loan right now that a CBA branchie told the client they didnt have genuine savings so couldn't get the construction loan because 'equity in the land doesn't count'.

 

@Corey Batt I get that - but this is coming from brokers here, who most would consider to be very advanced.

It's not having a go, at time I have to double take on policy - I have 1 bank to worry about.

Also now you're seeing different policy for direct and through broker - things that bankers can do that the brokers can't.

Not sure if this is the case with all bank but definitely the case with CBA.

 

I think it's mostly a case that the CBA is differentiating between direct channel and broker channel policies. I've seen this on a number of occasions. Other lenders occasionally do this as well but CBA is the most obvious right now.

As an example, earlier this year the CBA stopped accepting investment refinances, it even made the newspapers. Branches were still able to do this however.

It's not always in the the direct channels favour either. I can think of a few periods of time where the CBA was doing better pricing for brokers.

Overall I'm not a fan of this behaviour. Borrowers should never be disadvantaged for choosing one origination channel over another. It doesn't really work in the lender or the originators favour to do this in the long run either.

 

Never the case that broker could offer better rate than banker with CBA since the pricing tool came out (prior yes). Would only occur now if banker didn't push pricing to correct channels.

Yes finding more and more that they're things that direct bankers are able to do that brokers are no longer. The refinancing of home loans was probably the biggest one.

IMO these changes have really only been highlighted when the APRA changes came in, the changes so far have all been around investment lending. With the restriction of available funds, the banks have to chose which clients will be getting the investment loans and who writes these deals. Would expect there would have been a high level of thought going into this process.

 

I called Suncorp and they said that they will consider case by case basis and max IO only is 1 year. We have to give a good reason for IO. Any one has gave good reason and get IO with them yet?

 

Last week I had a loan approved with Suncorp. It was an equity release on an otherwise unencumbered property. $300k interest only at owner occupied rates of 3.79%. Very strong serviceability and about a 30% LVR. We gave then several arguments to support the interest only request, but fundamental to all this is it was an equity release with a very, very strong application.

To be honest though, I am surprised they approved it. I was prepared to back down to P&I repayments.

For an 80% OO purchase through Suncorp I wouldn't bother asking for interest only, it would be a waste of time. Even 1 year I/O doesn't really make any significant difference to the long term outcome.