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Pepper

Discussion in 'Property Finance' started by Speede, 20th Jun, 2016.

  1. Speede

    Speede Well-Known Member

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    Pros?

    Cons?

    For refinance / equity
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Pros - will probably lend when others won't

    Cons - same as above
     
  3. Redom

    Redom Mortgage Broker Business Member

    Joined:
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    Posts:
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    Location:
    Sydney (West) and Canberra
    Pros:
    • Decent servicing, particularly compared to competitors.
    • A very wide range of loan options - they usually have a solution when others don't, but have a price for it.
    • 85% no LMI option at decent rates - can be useful in some cases.
    • Relatively 'can do' attitude i find.
    • Pretty large, ASX listed.
    • Decent equity release policy, but no so good on the valuations and usually higher up front fees. Its usually a case of 'paying to see' where you are at with them, relative to other lenders who offer free upfront vals.
    • Note can get better offers on some of their products via mortgage managers than direct.
    Cons:
    • Usually best used for a specific purpose - not a lender of first choice, but rather a lender when you don't have many others.
    • Reputation as a non conforming lender.
    • Usual smaller bank downsides (less sophisticated net banking, etc).
    • Slow to pass on rate cuts.
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    What's the particular reason for wanting to refi to pepper?

    Cheers

    Jamie
     
  5. Perthguy

    Perthguy Well-Known Member

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    I did not start with Pepper but ended up with Pepper loans after my loans were sold to them. During my time with them, they were happy to jack up interest rates when official interest rates went up but did not reduce when interest rates went down. It was also problematic to refinance away from them.

    My average interest rate was over 9% with Pepper when I refinanced to AMP at 6.34%.
     
  6. Yson

    Yson Well-Known Member

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    What do you mean by "Problematic to refinance away from them", may you please share your experience?
     
  7. Brady

    Brady Well-Known Member

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    When refinancing to other banks, having a 'Pepper Home Loan' can throw red flags

    Having this exact issue with a client now. 80% LVR refinance should be walk in the park - but it's scoring bad which means credit assessors are trying to find any excuse not to do the deal.
     
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  8. Perthguy

    Perthguy Well-Known Member

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    Yeah, I had a bunch of loans with Pepper and when I went to refinance, because the interest rate on the loans was over 9%, no major lender wanted to touch the loans. The only deal my mortgage broker could find was AMP. Lucky for us they had a good rate. If not for them, we would have been stuck with Pepper paying more than 3% above prevailing interest rates.
     
  9. Redom

    Redom Mortgage Broker Business Member

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    FYI i don't believe they've passed on the recent rate cut to existing customers but have done so to new customers - very disappointing. Over time this can lead to much larger rate differences.

    If applying for higher LVR loans, particularly if outside a lenders DUA or in tricky finance markets (e.g. 2008) - it can create refinancing issues. At 80% it shouldn't be cause for concern. I find that given the cost of insurance, most don't actually do refinances above the 80% mark, but non conformers are exactly that - they specialise in outside of the box deals and poor credit histories. It only makes sense to go there for a particular niche or specific reason.
     
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  10. tobe

    tobe Well-Known Member

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    I haven't had this red flag issue. The red flag is usually some issue that was the reason it went to pepper in the first place. I've only done it about 5 times and I wrote the initial pepper loan so I knew how to manage their issues.
     
  11. dabbler

    dabbler Well-Known Member

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    You would imagine that the type of loan and product as originally taken out would be what raised a red flag ?

    If you went to these lenders for a normal full doc loan, you would imagine there would be no problem if it was shown it was full doc and reason they were used ?

    Either way getting the money for a good deal or rising market maybe worthwhile in any case.
     
  12. Speede

    Speede Well-Known Member

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    Reason for pepper is .... I got the highest valuation with them ... CBA , NAB all came back $120,000-$160,000 less.
     
  13. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    I wouldn't hold them to that. They probably made a mistake.
     
  14. tobe

    tobe Well-Known Member

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    that is really surprising, As far as I know pepper only every use full valuations, and generally speaking full vals come back less than desktops or kerbsides, unless there has been a significant internal reno, or the house is unique.

    Do you know if Nab or CBA did full vals?
     
  15. Redom

    Redom Mortgage Broker Business Member

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    How much is the property worth - that level of absolute valuation difference is quite large, unless its a property $1m+, than its not too uncommon.

    As mentioned earlier - Peppers great for specific purposes. I wouldn't put valuation outcomes/policy as part of their strong points.

    If valuation is the only reason your going to Pepper, it may be a good idea to do a few more with more suitable lenders and see how you go.
     
  16. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Sounds like Wizard when they were sold to GE who promptly gouged everyone
     
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  17. Perthguy

    Perthguy Well-Known Member

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    Yes! That is exactly what happened. Wizard were actually very good but they sold my loans to Aussie who sold to GE who sold to Pepper. GE and Pepper liked to put interest rates up but not down again :mad:
     
  18. Speede

    Speede Well-Known Member

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    Lowest val 1.06m highest val 1.24m.

    1.06m Cba
    1.1m Suncorp
    1.2m Bankwest
    1.24m Pepper

    Thinking of doing val with NAB, Westpac , Anz
     
  19. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    I'd generally suggest only using them for their specific niches - credit impaired or tight borrowing capacity scenarios, than based on highest valuation.

    That's certainly a scatter gun spread of valuations - ensure whoever you place with also fits the greater picture, else you can be taking two steps forward, three steps back.
     
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  20. Brady

    Brady Well-Known Member

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    Will any of the banks provide you with the valuation?

    Potential to go back to a bank with another banks valuation and request to be reassessed.

    What do you believe the properties actually worth?
     
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