Serviceability questions

Discussion in 'Loans & Mortgage Brokers' started by Hetty, 12th Aug, 2019.

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  1. Hetty

    Hetty Well-Known Member

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    We’ve sold our apartment and we want to buy a house. We have a good deposit (about half of the purchase price), but we are limited in what we can purchase because we have two IPs (and thus lots of debt) and also a dependant.

    Questions:
    1. If Big 4 will allow a purchase price of $850k but Liberty will allow $1mil, I realise it’s still a horrid plan to go to Liberty, but is there someone in between?
    We do have the option to sell an IP if we get backed into a corner with Liberty of course, and personally I’d just sell one now to make this easier but my husband wants to keep both.
    2. I think I know the answer to this one - there’s time pressure because we want another child. If we don’t purchase before then, we’re stuffed?
     
    Hetty, 12th Aug, 2019
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  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. Plenty
    2. Probably will be harder to service with more dependent children
     
    Terry_w, 12th Aug, 2019
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  3. Hetty

    Hetty Well-Known Member

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    Thanks Terry, thought so on both. Not sure why broker is saying Big4 or Liberty and not giving us other options!
     
    Hetty, 12th Aug, 2019
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    tell her to try resimac
     
    Terry_w, 12th Aug, 2019
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  5. Hetty

    Hetty Well-Known Member

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    Is resimac better in terms of rate creep than Liberty? That’s my main concern, I can handle the 3.74% fine but I don’t want it to be 5% next year!
     
    Hetty, 12th Aug, 2019
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There is probably none worse than liberty...
     
    Terry_w, 12th Aug, 2019
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  7. Hetty

    Hetty Well-Known Member

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    Thanks Terry, very helpful. I can see the broker said Firstmac not resimac, will see what resimac say.
     
    Hetty, 12th Aug, 2019
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    On average, if a deal services with Firstmac, I would prefer them over Resimac Accelarate ( pepper) for a few reasons, slightly better rate is one, but also making sure we dont soak up the higher serviceability lender too early in the piece, when a lower servicing lender works ok.

    ta
    rolf
     
    Rolf Latham, 12th Aug, 2019
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  9. Hetty

    Hetty Well-Known Member

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    Thank you. Next question, what happens if one of these non bank lenders goes belly up? Say I put down my 50% deposit when I purchase, am living there for a few years then it’s all over red rover. What happens to our house/money?
     
    Hetty, 13th Aug, 2019
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  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Belly up is possibly ok, because the asset ( being the mortgage secured loan) can be sold to another lender..................lenders sell portfolios, a good exampls is HSBC sold their broker book to Firstmac pre or just post GFC.

    The more complex and potentially damaging issue is if the funder wont release your redraw money when you want it or need it for whatever reason.

    The rules governing the redraw are similar but different for each lender.

    I have even had clients limits on LOCs with major banks reduced for a variety of reasons - the money in the LOC was excess payments, not excess borrowings.

    This can cause issues obviously

    ta
    rolf
     
    Rolf Latham, 13th Aug, 2019
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  11. Hetty

    Hetty Well-Known Member

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    Thank you Rolf. One more question, do they have offset accounts? (I realise this would be the same issue as redraw with them not releasing money, I just like having an offset)
     
    Hetty, 13th Aug, 2019
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  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not in the true sense of a separate account. Typically if a lender can't take a deposit without a loan, this suggests any offset is a redraw offset...

    Ta

    Rolf
     
    Rolf Latham, 13th Aug, 2019
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  13. Never giveup

    Never giveup Well-Known Member

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    Given the IR's are record low therefore the minimum IR + 2% should increase the serviceability or not much difference?
     
    Never giveup, 19th Mar, 2020
    #13