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NAB - Purpose for cash out

Discussion in 'Property Finance' started by almostthere, 13th Aug, 2015.

  1. almostthere

    almostthere Member

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    What purpose do you generally tell to NAB when doing an equity release?

    Does NAB need proofs to substantiate the claim?

    Any recent experience?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Depends on the scenario, what you're actually going to use the funds for and what your financial circumstances can support. Depending on the LVR and their risk analysis, the NAB does go to varying lengths to verify the purpose of the cash out. In some cases they'll want to actually control those funds to ensure they're used for the purpose you state.

    If you're going to use the cash out for further property investing, any lender will want to understand how much additional money you'd need to borrow and they'll want to model that around their existing policies. Understanding those policies before you access your equity is often critical to the application.
     
  3. sydprop

    sydprop Active Member

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    NAB were so painful on this when I discussed refinancing that I didn't bother despite having some incentives to do so... Peter makes a good point that you must understand the policy before applying.
     
  4. pinkboy

    pinkboy Well-Known Member Premium Member

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    'Alcohol, drugs and hookers, then waste the rest'.

    pinkboy
     
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  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    With some lenders, this'll fly better than "to buy an investment property."
     
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  6. mcarthur

    mcarthur Well-Known Member

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    "Rest"? You mean there'd be some left over?!?
     
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  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Holiday in Thailand is quite acceptable for a certain amount. It'd be one hell of a bender if you told them you were going to spend $100k on this, I'd be worried that you'd never come back. :confused:

    It's reasons like this why finance for serious investors isn't something that you can simply do yourself. The bank or their help desk will say that you can borrow the money based on your income, but they're unlikely to give you the information to help you in the longer term. There's a lot more finance than simply getting a loan.

    A few people have recently mentioned that the NAB is a pain in the neck for releasing equity. The NAB has recently adjusted their risk parameters and now want more information around cash out than they used to. Frankly though they're not that different to the CBA, Westpac and numerous others.

    If investors are going to get annoyed because a lender puts a few barriers in their way, they're going to run out of options very quickly in the current lending environment. They easy way around this is to get more comprehensive advice from a broker that will give you answers considering multiple lenders; not just for the short term, but the long term as well.
     
    Last edited: 14th Aug, 2015
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  8. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    NAB's credit system essentially dictates whether proof of funds is required so there is no hard or fast rule.

    However anything over 80% is a guarantee that proof of funds is required.

    Under 80% is most often no but again their credit system may request it.
     
  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Is this nab red star or nab broker?

    Under 80 and "future investment purpose" is generally fine.

    Above 80 - and the same might be ok but you'll need to spell out what that future investment is and it will need to service on their calculator. Some assessors might want to see a contract of sale.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Jamie I'm starting to get noises from NAB credit that they want more direct evidence for cash out above 80% than a simple servicing calculator. Last week it was suggested that a contract of sale for the next purchase would be required.

    Naturally we couldn't do this and we did give them alternative documentation, the loan was successful, but the NAB and many others are definitely tightening their cash out criteria above 80%.
     
  11. Redom

    Redom Mortgage Broker Business Member

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    They've asked for this @ 80 before too - as Shahin mentioned, if credit scoring picks up a higher risk assessment, they'll request further evidence. This can make NAB a little unpredictable when it comes to verification of cash out purpose.
     
  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I've never had them request further evidence at 80 and I've done loads with them - maybe I've had a good run so far.

    Last 90 LVR cash out was approved without hassle too - but I don't take that for granted. I know that will change.

    I also seem to have the same 3 or 4 assessors each time - maybe that helps. I don't know.
     
  13. Redom

    Redom Mortgage Broker Business Member

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    If you add in: an active credit history, <6 months in employment, tight servicing, high consumer debt, etc - may get that outcome.

    It all comes down to the computer assessment of it - if its deemed high risk, more questions/verification required.
     
  14. almostthere

    almostthere Member

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    Hi Peter, May I know what are the alternative documentation that you provided? My broker is suggesting to submit contract of sale for some land purchase.. though I have no intention to purchase it.. will that work?
     
  15. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Frankly I think that's terrible advice and asking you to produce false documents says a lot about that broker.

    If the contract you can come up with fits the scenario it might work, though I wouldn't be comfortable with this as it's walking a fine line to fraud. A general scenario that may not happen is one thing, providing false documents a far worse. Being caught in this case probably means just a slap on the wrist, but you might find it hard to borrow money from that lender in the future.

    Some things that might work might be:
    * accountants letter
    * financial planners letter
    * statutory declearation
    * pre-approval application alongside the equity release
     
  16. almostthere

    almostthere Member

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    Thanks Peter. I approached my accountant but he wasn't comfortable issuing this letter.

    I am having a chat with my financial planner this week, will see how that goes.

    My broker says statutory declaration might not work.

    Preapproval letter isn't an option atm as I wont be purchasing any property just yet.
     
  17. datto

    datto Well-Known Member

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    NAB are nuts. Back In 2013 my 5 yr IO with NAB expired. I approached them for a cash out as I had good LVR.

    Watcha need the money for,? was their response. I said, Buy shares, by the way,i use NAB online trading..

    Loans officer told me to get a letter from their online trading confirming I intend to buy shares lol. I told loans officer she must be nuts, koo koo, gaga.

    I went to the happy dragon across the road and I was treated like royalty. It felt like "Mr Datto, are you sure we can't give you more money?"

    Downside is that their counter staff are as rough as guts. Nothing beats CBA for professional customer service IMO.
     
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