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Lenders that are generous on serviceability

Discussion in 'Property Finance' started by TFBoy, 2nd Aug, 2016.

  1. TFBoy

    TFBoy Well-Known Member

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    We have been very focused on interest rates thus far, myself included. However I am now at a stage where I have hit a serviceability wall with ANZ. Rates are actually not that important anymore to me than compared to tax deductible debt. (rates usually can also be negotiated after approval or change to fixed loan etc)

    Therefore I am now looking for lenders with who are generous on their capacity to service calculations for personal/or family trust. I have good buffer in offset ie 10% of total loan amount, however this can not be deducted off the loan when calculating serviceability.

    Initial discussions on PC seem to point at Liberty, however is there any other Lenders are generous amongst the big 4/2nd tier or lenders like Liberty?

    I hope this will be helpful to others who are looking to borrow when they are against hitting the wall due to recent changes.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    ANZ are one of the most conservative, so it's unlikely you'll have to go straight to Liberty. You most likely have a whole world of lenders to look at before them.

    Run your scenario past one of brokers here, they'll be able to check servicing and see what's possible for you.

    Are you cross collateralised at ANZ?
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Nab is the most generous of the big 4
     
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  4. TFBoy

    TFBoy Well-Known Member

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    Non cross collateralised. The recent min living expenses for ANZ was the deal breaker for me. My last facility would have been declined had the new policy been used, my lender ensured he submitted the app before the deadline.
     
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  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You'll find that other lenders will treat your existing debt much more generously than ANZ, so maxing out there is not the end of the world :)
     
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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Id suggest that if you are looking to grow your portfolio further than the next purchase, that you look for the sweet spot, that may be WBC NAB or choicelend before liberty, thus leaving liberty for another purchase at a later date

    ta

    rolf
     
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  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Sounds like you have outgrown your ANZ lender so time to move on and get a professionals help.
     
  8. Zak

    Zak Well-Known Member

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    Iam just curious i keep hearing over and over again the same lenders.

    1. NAB most generous out of the big 4
    2. Liberty - calculate actuals borrowings.

    Are there not other generous lenders apart from the ones mentioned above?
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    There are - Pepper, Advantedge, Rams are all on the more generous side. Firstmac still are in some circumstances - it depends how your earnings are made up in some cases.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I got some surprisingly good results from Westpac this week, but I'm not sure why. Further investigation is needed.

    This may sound heretical, but ANZ actually work very well for just a single purchase with no other existing debt. Still terrible for investors. The point is the best servicing lender still depends very much on the individual circumstances.
     
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  11. Redom

    Redom Mortgage Broker Business Member

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    Heya,

    Good question! This has had some slight adjustments in recent months with a few lenders loosening up a little. Some comments, not in any particular order - but my commentary with it. Higher LVRs may change the equation here as often it defers to the insurers calculator (genworth) which isn't quite as good as others.

    1. Westpac have a decent calculator (and great policy) after their recent changes again allowing neg gearing, 90% loans for investors, etc

    2. Advantage - similar to NAB, allows construction loans, can include NAB debt as a separate lender too.

    3. Adelaide - also recent positive changes, calculators not as transparent as others, but the results are decent. Construction loans too. Decent rates.

    4. CBA are not too bad. Their assessment of their own debt being the same as other banks debts is useful while building a portfolio - by this i mean a decent calculator to come back to for future releases. Policy wise, i think they're the rolls royce in the marketplace (with the $1mill LMI deferral being their main weakness), so many goodies.

    5. NAB - a bit dear for investors given they price on repayment type and LVR and purpose explicitly. May not be too happy if your very rent reliant/neg gearing reliant too.

    6. Liberty (the best) - but proceed with caution and careful planning. They may not gauge now, but when a lender has no competition, i don't like the longer term odds.

    7. Pepper (via Homeloans) - great for O/T, commissions, bonuses and investors - take 100% of it. Again proceed with caution, not the best at passing on rate cuts. They do have an 85% no LMI deal which can be very handy when used well. I've had a few potential bridging scenarios that would have cost customers thousands in fees that have been avoided by using their calculator/product/policy niches to avoid linking the sales, and refi'd back out (no dramas doing so). Big wins when used strategically and carefully.

    8. St George - they have a very very generous negative gearing add back. Its not particularly good overall though given they have a harsh assessment rate on debt. Decent policy set though.

    Then there's a few calculators that tend to specialise for first home buyers. I'm with Peter, ANZ are good for that first loan when there's no other debts.

    ANZ, for all their bagging, have got plenty of reasons that hold their own (hello 90% desktop valuations and straightforward, consistent equity releases!!!) - that make them surprisingly suitable for early stage investors making the most of a price boom to accelerate purchases (and don't need to come back for equity later on).

    Surprisingly, so is Bankwest. Macq aren't too shabby either for first timers with no other debts.

    With borrowing capacity, its certainly individualised (with some degree of generalisations). If i have a first timer the responses and calculators are going to be very different to experienced investors. Same goes for those with different objectives and plans, with varying risk tolerances.

    There's plenty of other lenders out there to - all tools in the toolbox that come in handy. :)

    Cheers,
    Redom
     
  12. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Auswide have a generous calc as well and also do 3 unit developments via resi channel.
     
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  13. kr11

    kr11 Well-Known Member

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    hi colin
    would you know how they treat ofi debt, what loading they put on
    thanks
     
  14. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @kr11 not sure but will find out and let you know.
     
  15. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    I asked the BDM via email and he was a bit sketchy and may not have comprehended what I was asking. Seems it is calculated at 7.25% of actual payments with OFI.

    Only way to know for sure is to pump in all the required figures and see what the result is. Probably could "reverse engineer" from there and work out what it does as its based on excel.
     
  16. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Auswide runs external debts a P&I, 7.25% - putting them around the middle to lower end of the pack in terms of borrowing capacity. Not terrible, but certainly not great and quick way to run out of borrowing capacity/remove your ability to release equity as your portfolio expands.
     
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  17. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    I wont trust my aggregator software then as they seem to appear near the top!!!
     
  18. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Never ever ever ever trust the aggregator software! :p A recent stat CBA state manager was saying at a function that 1/3rd of applications they receive fail at submission due to servicing - wonder how much of that is the rubbish calculators that a lot are using.

    I only use direct lender calculators, no other calculator can guarantee 100% accuracy and it only take 1% for a decline.
     
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  19. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Yep, learnt this the hard way with my first ever deal lodged with them. My "mentors" at the time failed to inform me that the middle section in the clac. requires manual calculations so failed servicing. It was for my neighbour as well which made it even more awkward.

    Always default to actual lenders servicing calc for 100% accuracy and use agg software as a rough guide.
     
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  20. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Can't even rely on it as a rough guide any more unless it's an absolutely basic with only one property. I've reviewed 5 different platforms, in some cases speaking the actual guys writing the software. They're all admitting that their software isn't accurate.

    It's not really any fault of the software. Lenders aren't giving them access to the data they need, they literally have to 'guestimate' each individual lenders HEM tables. The reason why so many applications have problems is because they're investing in their own online systems and not supporting the systems that brokers actually use.

    And don't get me started about the CBA calculator. Very user un-friendly. Fortunately a very simple hack and most of the problems with it are eliminated. Happy to pass on the version I use to any brokers if they want it.
     
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