Lender options for equity pull

Discussion in 'Loans & Mortgage Brokers' started by virhlpool, 19th Apr, 2017.

Join Australia's most dynamic and respected property investment community
  1. virhlpool

    virhlpool Well-Known Member

    Joined:
    14th Aug, 2016
    Posts:
    692
    Location:
    Sydney
    I have a couple of general questions about home loan and lenders.

    1) I have heard that with LVR of 88% it's difficult to pull equity in future with most banks, at least in case of CBA. Can you recommend a bank where pulling equity in near future isn't an issue with 88% LVR. Basically I am eyeing a property with need of renovation and therefore I would prefer to pay 12% deposit (instead of 20%) and get valuation done after 3 months from renovation in order to pull equity. Not sure if CBA is the right choice for this and which are other options.

    2) Which banks offer equity pull based on desktop/ auto valuation right after the property purchase, of course assuming that auto valuation is higher than purchase price? Again, I am aware that CBA does it though it's not always guaranteed. Are there any other banks as well that offer this?

    I will appreciate your views.
     
  2. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,517
    Location:
    Melbourne, Australia
    I would speak with a mortgage broker, however my thoughts are;

    1. No one will know what the future holds, with APRA they are tightening down on high leverage. I heard it is rather hard to get equity above 80% but up to is easier.

    2. I was with ANZ about 12 months ago and they pretty much did that, no issues however my LVR on the property was about 50% and got it up to 80%. I would say very few would take a desktop val if going above 80%.
     
  3. Jess Peletier

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

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Have you had your broker check servicing for you?

    You can get equity out at CBA, although they're pretty finicky when it comes to investment at the moment so I would not be relying on them to play nicely in LMI territory.

    Also their desktop vals are only under 80% LVR, but if you're doing reno's a full val will take that into account where a desky won't so a full val is likely a better option anyways.

    Normally, if you can present a strong case getting cash out in LMI isn't too much of an issue - you'll need strong servicing though, and possibly evidence of what you want to do with the cash.
     
  4. virhlpool

    virhlpool Well-Known Member

    Joined:
    14th Aug, 2016
    Posts:
    692
    Location:
    Sydney
    Thanks, mate. With regard to #1, is it easier if I keep LVR 88% for now and pull equity only at 80% when I do (meaning equity pull will be lower than my eligibility then)? In that case, do I need to pay additional deposit to make it to 20% of valuation then or can it be reduced straight from equity?

    With # 2, I was referring to banks which would consider desktop val at 80% LVR and not above it.
     
  5. Corey Batt

    Corey Batt Well-Known Member

    Joined:
    14th Jun, 2015
    Posts:
    2,091
    Location:
    Adelaide, SA
    Going over 80% LVR does restrict the number of lenders out there who will release equity - or better yet release equity easily, but there's still options. It really depends on your exact details, property type, servicing etc which pathway is best.

    I wouldn't rely on doing an autoval directly after settlement either - assessors are wising up to these little tricks and it's a great way to get your bank not too happy with you after settlement.
     
  6. Colin Rice

    Colin Rice Mortgage Broker Business Member

    Joined:
    9th Jul, 2015
    Posts:
    3,183
    Location:
    Perth
    Still other lender options available for equity over 80% but usually limited to 20% of properties value.

    As Corey said depends on a lot of other variables so best to get a knowledgeable broker to review for you as there will be heaps of other variables to consider that if divulged will likely invoke further confusion.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    The CBA is one of the better lenders for equity release, many lenders simply won't help above 80% at all. They don't really have an appetite for investment right now though, so there's not a lot available. ANZ might be an option, but they are very conservative in their lending criteria.

    A desktop valuation shortly after settlement isn't going to do any favours. Desktop valuations don't know anything about the renovations you might do. They'll simply look at the previous purchase price, apply the growth since then and that will be the new value. Three months after the purchase, you'd be doing well to get a 2% increase from a desktop valuation. Most lenders require a full valuation for a 90% equity release anyway.
     
  8. Ethan Timor

    Ethan Timor Well-Known Member

    Joined:
    16th Nov, 2016
    Posts:
    154
    Location:
    Australia
    That would mean that you have paid the LMI for only 3 months. Doubt it's worth it?
     

Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia