WBC increases rental used in Servicing

Some lenders do take a more reasonable approach.

Keep in mind that Westpac are shading by 10% and they still ask you to declare what the actual holding costs are. They shade rental income by 10% then add the holding costs on top of the living expenses. If they have your tax returns, they'll use this figure. In most cases it's a lot more than that 20% difference.

I know one lender that internally assumes a minimum holding cost figure of $350/mth (even if you declare lower), then they still shade rental income.

Another lender has a good approach. They assume 20% holding costs and 5% for vacancies. So they shade by 25% in total and take that unless you declare more or give them evidence otherwise. In my experience this is acutally lower than mosts people holding costs overall.

 

20% shaving + 10% min rental expenses what the norm.
Now WBG seem to be 10 + 10 back to 80% max net rent

 

Pepper will take up to 100% of rental income.

I can't for the life of me understand why people only consider the majors. In my view they are not competitive.

For example some brokers keep only recommending CBA... worst ones if you want to stuff your portfolio.

 

Some of us can remember when some of these marginal lenders go caught short on the wholesale funding side during the GFC. In the current round of interest rate tightening, it is quite conceivable that similar issues can happen. The likes of Pepper could easily ramp IRs on existing loans much higher than the majors if their back is against the wall, safe in the knowledge that you have nowhere else to go. That could easily turn someone into being a forced seller in a depressed market and that's what disasters are made of.

It's all about risk management. Staying in a competitive re-fi space is part of managing funding risk. We all know portfolio stuffing to the max is not without its risks. Of course, if things go your way, it certainly has its rewards too... pick your poison!

 

Funder of Pepper Loans for full doc are conservative.

The ones you need to worry about are Resimac, Liberty, Latrobe, Macquarie Bank, and Bluestone....

 

Need to get ABC fact check (or a qualified broker) on the case for this wild claim. Isn't Macquarie a ADI, subject to APRA guidelines?

Also I would have thought in terms of risk it would Resimac < Pepper < Liberty. If I meet loan servicing requirements with Resimac then I can likely refinance to Pepper, so less likely to be snookered with high rates.

 

No offence some brokers always seem to have their trusted go to like CBA.

Be very careful of Macquarie... yes they are ADI and subject to APRA... but that is only policy. If you go back to 2008 they were ruthless as lenders....similar to CBA who are very litigious compared to the other Big 4.

I in terms of highest risk to lowest based on my understanding... I would be Bluestone, Liberty, Latrobe, Resimac, and then Pepper. I put Pepper least risk as they are pretty much a bank just don't put into offsets as they are non-ADI. Funnily...I see CBA and Resimac as the same risk as Pepper...as they are obstinate to deal with...whereas Pepper has shown flexibility and have seen it my dealings so long as you have good conduct...same with Latrobe.

 

Yeah - I totally glossed over that. If I was a BDM I'd be ringing literally every broker on my book to share the good news.

 

Did any one try to refinance Pepper loan to ANZ with serviceability assessment?

 

I am going to try. Still waiting for ANZ to return my call.

 

If you mean WITHOUT serviceability assessment, there's another thread where someone tried this with ANZ (refi from Pepper) ANZ said it's a full assessment, doesn't qualify for the simple refi process.
Stuck with a lender...............

This comment has not aged well at all, Pepper is one of the least competitive out there, they hiked rates out of cycle by 0.7% in some cases when the RBA only lifted the OCR by 0.25%...
Anyone who built their portfolio with Pepper would be stuffed now, especially compared to using the majors, yes like CBA.

 

Damn so ANZ has a pepper 'flag'.
Yes was going to pick up on Sash's comment. Pepper was good at that time.
Now they are high.
I am considering financing out to another non bank lender who might be cheaper. Need to see who is cheaper than Pepper but still with good serviceability. But maybe now with higher IRs I might not even service with other non-banks. Might be trapped.

 

Granite Home Loans also have a simple refi product which might suit, not a major but better rates than Pepper.

 

Thanks I'm lucky that I'm in the situation where I can afford the repayments and the loan is not big in this situation because I have big offset. But it's still wasted money and when another fixed term loan comes off I'm going to need to be doing some serious shopping because potentially facing another loan with a non Bank lender

 

Wanted to touch back on this
- any changes across the majors? 90% gross rent - less actual (10% minimum) = 80% max
Any of the majors doing anything better, different?
- Pepper the only one doing 100% rent, do they do then confirm actual rental expenses?

Trying to push for a review of this...
I would like to see the option of 100% actual rental income and expenses (less depreciation and 1 off costs) evidence by x2 year tax return
Going to likely see a small haircut as most rents have significantly increased by using 2 year average.
But only way I can see most credit/policy team pushing past recommendations