Most Favourable Loan Purposes

Discussion in 'Loans & Mortgage Brokers' started by BKRinvesting, 10th Oct, 2017.

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  1. BKRinvesting

    BKRinvesting Well-Known Member

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    as per title,
    Banks often ask what equity loans will be used for.

    In general, what purposes have you found that banks like and what ones lead to red flags?

    I’ve heard that PPOR renos are one of the most favourably viewed?
    Any others?

    Context: not looking looking to deceive - just thought it would be an interested discussion into the banks thinking...
     
    BKRinvesting, 10th Oct, 2017
    #1
  2. Redom

    Redom Mortgage Broker Business Plus Member

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    Depends on the amount - a $1mill PPOR reno cash out may be tricky.

    Some lenders don't really go into too much detail (policy niche now). 'Future investment use' does the job. 2014 policies still applied to date.

    For others:
    • A clear explanation about investment purpose often works with plenty of lenders at <80%. This explanation varies depends on the clients profile (e.g. sophisticated investor vs new/young investor).
    • Share investing/other asset classes
    • Purchase additional property (note that it does often trigger further servicing tests).
     
    Redom, 10th Oct, 2017
    #2
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    RED flag

    ta
    rolf
     
    Rolf Latham, 10th Oct, 2017
    #3
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