Small additional investment loan

Hi guys,

We need to borrow ("cash out") a couple hundred thousand dollars and already have over $1m in borrowings at < 50% LVR. We're having trouble getting a broker to show much interest in obtaining the single small loan, without refinancing the entire portfolio.

Now, I completely understand the comms on $1.3M are better than on $200 - $300K and we were happy to do the full refi, but the reality is, we're struggling to service the entire $1.3M but could seemingly service a small loan through a second or third tier lender, just the interest fades when the rest of the refinance is taken off the table.

Any advice? Should we just approach a lender on our own? I ran it through Peppers servicing calc which shows adequate borrowing capacity on the small loan, I know their reputation is not great though. Feel like this is getting ridiculous, hoping the APRA changes may help but this has been dragging on for a year now and getting completely frustrated.

Also wondering, if we have a loan approved, say through Pepper, is there any issue leaving it undrawn for a number of months without them reclaiming it and cancelling the borrowings?

TIA.

 

So there’s multiple securities? You can hive one off and do the cashout on that?

I’d say that issue or another is the reason why you can’t get a broker to do this. I’d be surprised if it was only about the commission.

 

It may not be just about the commission. Yes there is are multiple securities but there is one title free and clear which could be used with a new lender.

 

when borrowing you would generally find lenders unwilling to take a second mortgage behind another bank. So if you cannot get the existing lender to lend more you might have to refinance the lot - assuming you are not talking about borrowing against an unencumbered property

 

If the cash out funds are going to sit in an offset account you'll need to be ready to pay fee for service or the broker won't get paid at all. Could explain the lack of enthusiasm.

 

Thanks Terry, yes there is one unencumbered property which could be used.

Yes very true, that's why I was happy to refi the whole lot so there was a payment there for the broker. Seems I may be stuck in the rock and hard place and should probably just approach a non-bank myself and hope it doesn't destroy my credit rating if there are issues.

 

Or look for a fee for service broker I guess, do these even exist?

 

What is the general clawback period these days?

 

Ah thanks Rolf, I see, so it would need to be drawn straight away to avoid the loss of commission.
Do you know, if I go directly, is there any risk of the lender withdrawing the loan say 6 months in if it hasn't been drawn by then? Just tossing up the possible cost and risk of the various options.

 

Can’t the broker who arranged your existing loans help you?
Marg

 

Hiya

Jess might have hit the nail on the head above.

If the funds are going to sit in an offset or redraw - then there's no payment to the broker for their work.....and if you have multiple properties it's not going to be an easy application to prepare/submit. If you were willing to pay a fee for service you might find someone willing to assist.

Cheers

Jamie

 

We do fee for service when required.

 

Thanks Jamie, just wondering if you could clarify, would multiple properties add more work if it's only one loan on one currently unencumbered property with a new lender while leaving the others untouched?

 

He's gone MIA and I've had others have a look at it who generally lose interest when the servicing on the full portfolio becomes too tight. Happy for the clarity from here on the reasoning so at least I can work on getting around it rather than keep spinning my wheels

 

No worries.

Multiple properties create more complex applications.

There's more number crunching (it can take ages to run servicing calcs for a client with multiple IP's) and generally a lot more paperwork involved - even when there's only one security/loan involved.

Cheers

Jamie

 

Thanks Jamie, that makes sense given it will still all need to be considered as far as servicing goes for the new loan.


Fingers crossed the APRA changes loosen up enough to bring us in the realm of being able to refi the entire portfolio in a couple of months, which will give us better rates and facilities anyway, so I'll give it a last go then, otherwise I'll look at the other fee for service etc options.

Thank you all for your help, it's been very helpful as usual