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Servicability issues.

Discussion in 'Property Finance' started by Rugrat, 14th Jan, 2016.

  1. Rugrat

    Rugrat Well-Known Member

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    This is more of a rant then anything. Ever since the govt tightened the lending regulations our servicability seriously sucks. As in it's basically non existant.
    We aren't even servicable for the debt we do have anymore. And its not because we cannot afford to pay it. We can and do pay it. Its not because the household income is low. It's not.
    Its because we have 5 children. And the banks have decided that the figure for each dependant is a rediculously amount, completely disregarding the fact that having five kids doesn't actually cost the same as having the one child and then just multiplying by five. Each child actually gets cheaper, because you already have everything they need. When you are already feeding 3 it doesn't actually cost much more to add two more mounts in there.

    I am starting to feel like one of those first home buyers who thinks they will never be able to afford to buy a house. It doesn't help having equity if the banks all say you are unservicible and so you cannot access it.

    Thinking I may need to take the cash we have saved to use as a deposit and go invest it in shares or something instead. Until I have enough to buy a new house outright. :/
     
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  2. The Y-man

    The Y-man Moderator Staff Member

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    ...or that terrible conversation "Kids, we have some bad news. We are giving you up for adoption. It's just for a little while, while we sort a few things out. We promise we'll come and get you once we sort thing out ok?"
    :eek:


    The Y-man
     
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  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I'm hearing you.

    I can understand the need for regulation - and a lot of the changes were justified but there are certain elements that are just silly and lack logic.
     
  4. tobe

    tobe Well-Known Member

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    It's a bugger. due to lots of factors when we got married we spent about 5 years without any capacity.


    Commercial property finance and margin loans aren't affected yet by the apra changes of your set on getting more leverage.
     
  5. Fargo

    Fargo Well-Known Member

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    Great time to buy shares at the moment even if you stick some on STW tomorrow at a 3 year low until you find something better should get a 5% dividend in a few months. I have sold 2 properties to access the equity and will put most the proceeds in to the share market.
     
  6. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Plenty of other asset classes you can invest in whilst resi property is targeted. CIP's, shares, businesses - heck even just looking at your options within SMSF.

    Whilst it's a pain what the regulators have done to many perfectly sound investors, we have to make the most of what we can with the hand dealt.
     
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  7. Coota9

    Coota9 Well-Known Member Premium Member

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    One of mine was close to being adopted out..lucky for her she turned 18 in October:D

    Double celebration
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Many people are in the same boat - those with multiple properties already and/or multiple children. many could not qualify for what they have and cannot release equity.
     
  9. jaybean

    jaybean Well-Known Member

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    What...? Hum, maybe I should be looking into commercial...
     
  10. jaybean

    jaybean Well-Known Member

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    Yup which is important to consider if looking to sell and buy another, even at the same or lower price. The option to "redeploy" the money may not even be there. It'll be like playing a game of musical chairs except you have zero chance of sitting down again.
     
    Last edited: 15th Jan, 2016
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  11. Scott No Mates

    Scott No Mates Well-Known Member

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    You'll still need 30% +/- but at least serviceability would be better.
     
  12. jaybean

    jaybean Well-Known Member

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    Does mortgage insurance exist in the CIP world, and if so are the rates roughly comparable to resi?
     
  13. tobe

    tobe Well-Known Member

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    No LMI. Though if you have equity in your resi property you may be able to use that instead of cash.
     
  14. Scott No Mates

    Scott No Mates Well-Known Member

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    @jaybean You can also get landlords insurance on commercial through your broker (not that I know anyone who does).
     
  15. mini2

    mini2 Well-Known Member

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  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    In the real world ASIC doesnt want that.....................

    We are very close to the reality that if you want a loan in the future you need to provide 3 to 6 mths spending acct and card statements, and expenditure will be deemed from those, not what you declare or what the poverty line is.

    Cash in an out better marry up with only a small cash loss flow.

    Before the fiscally concious get all excited ..................... if you spend 1000 a mth, the lenders will still make you and average spender for their purposes.

    There is some common sense in that approach but how far would we like it to go......

    ta
    rolf
     
  17. pinkboy

    pinkboy Well-Known Member Premium Member

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    The flip side of more relaxed serviceability of Commercial is that lenders are not bound by the laws of APRA and can charge you for the valuation, (sometimes excessive) establishment/exit fees and P&I upfront as a consideration (although there are IO options out there for sure).

    That's all after the 25% - 40% deposit dependent on the deal/location/property.

    pinkboy
     
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  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    This makes me a bit mad. I love the idea of using statements to see actual expenditure, but it should work both ways. Good savers should be recognised as that.
     
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  19. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Agree. I used to eat way too many two minute noodles to save a buck.
     
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  20. jpcashflow

    jpcashflow Well-Known Member Business Member

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    The changing rules have effected a few other people as well. Very normal in this climate.... Yes we all understand that the logic is not there but seriously there are allot of people out there with personal debt.

    I have been building up a share portfolio as of late.