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Which lender?

Discussion in 'Property Finance' started by srirang, 7th Oct, 2015.

  1. srirang

    srirang Well-Known Member

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    Melbourne
    Hi all,

    We have 4 IPs so far and are now considering buying an apartment in the city as a lifestyle choice. We would rent this out on short term rental when we are not using it.

    We have all the IP loans with ANZ at the moment and PPoR with Macquarie. We've recently had some bad experience with ANZ which has taught us the perils of being tied to one lender. We are in the process of spreading them around. 2 IPs will go to ME Bank, 2 will stay with ANZ.

    My broker has recommended NAB (Connective Advantage) as an option. He also recommended ING but I have discounted them based on some recent posts. The new loan will be 10 years I/O and will probably fix for 2 years to start with.

    Questions for the forum are,

    1. How are Connective Advantage when it comes to equity releases?
    2. How easy/difficult would it be to fix again when the fixed period expires. (ANZ have been a pain - when the fixed period expires, they automatically switch it to P+I and you have to lodge a new app to make it I/O),

    Should I consider any other lender. Our strategy is to buy+hold. We will probably buy 1-2 more before starting to pay down and use a combination of LoE and LoR.

    Thanks in advance.

    Cheers
    Srini
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Did the broker recommend the ME Bank change? That and ING would be ringing alarm bells for his skill levels
     
  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    ING has terrible servicing and cash out/equity release policy. If you go with ING and fix your loans you may find you have snookered yourself by way of not being able to servicing the equity release portion.

    I would recommend re-evaluating your strategies and ensuring that the right lenders are lining up with those strategies.

    Lenders like ING and ME Bank rarely marry up with professional/serious investors.
     
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  4. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Interesting @srirang. Is your broker experienced in dealing with investors? The ING recommendation has me wondering.

    Was ME also their suggestion or yours?

    Seems odd. As Shahin has mentioned, they're not exactly the kind of lenders that work well for people building investment portfolios.
     
  5. Redom

    Redom Mortgage Broker Business Member

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    Hi Srini,

    At this point in your journey and with a more settled outlook from lenders, you should be able to exactly map out how you'll make your next 2-3 purchases. That should provide the clarity you need to pick out the necessary lenders.

    It would particularly be a good idea to do this before jumping into a NAB funded product. NAB are the current outlier in terms of serviceability calculator, so if this remains, they may be very useful to you for your last purchase.

    ING, because of their rate, may be a useful option. I know they've been in handy for a certain customer segment with their current offering. You may not need to release equity, but it should be communicated to you early the limitations of ING.

    There isn't really enough information to validly communicate other options to you other than provide feedback on the ones outlined.

    My experience with ME has been incredibly frustrating in terms of timeframe, but in terms of an investors ability to release equity, they've been on par with others and until recently had a strong calculator. The fact they don't apportion rental income by ownership is particularly valuable as very few do this. Their NRAS policy is also very good. The problem is their inconsistency, which as a broker, ranks as 'very important' to me and my clients. I need to manage risk, and inconsistency can create unnecessary risk.

    In either case, i don't think there's enough information provided to question your existing brokers skill/experience levels (they may indeed be very good!). As Shahin said, suit your lenders to your strategies. ING (and every lender) have limitations, but these limitations may not effect you and you benefit by a close to market leading rate.

    Cheers,
    Redom
     
    Last edited: 7th Oct, 2015
    srirang likes this.
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The Advantage recommendation is a reasonable one. Their servicing is quite strong so they can be good in the long term and relatively speaking they are competitive for investors at the moment.

    ME Bank and ING look competitive in the short term, but either lender will almost certainly create challenges at some point. They're great lenders if you're after a simple owner occupied loan or a set and forget scenario, but if you're planning to build a larger portfolio they will get in your way and you'll likely find yourself refinancing again.

    I take it the problems you've had with the ANZ are that you've got to reapply for I/O after the initial expiry period. Sadly there's only a few lenders who make this a truly easy process, namely the CBA and Westpac. I'm not confident that it will stay easy in the future either; odds are that every lender will have some sort of extended process for renewing I/O period.

    The best solution I can give for this problem is to take 10 year I/O periods where they're available, it at least defers the problem. There's no guarantee of easy solutions to I/O renewal challenge. I'd suggest that ING and ME Bank could be worse than ANZ in the future.
     
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  7. srirang

    srirang Well-Known Member

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    Thanks everyone for your help and quick responses. Another great example of a knowledgeable and helpful bunch of people on the forum.

    I did not suggest ME or ING. I have read posts about ING in the past and have stayed away from them.

    Advantage does sound like a reasonable choice and offer 10 year I/O.

    What about Bank of Melbourne (Westpac)? Any issues to consider if I use them?

    Thanks for all your help. Much appreciated.
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    We're doing quite a bit with Bank of Melbourne right now, they're quite competitive at 80% LVR (don't bother if you need higher for investment purposes). Frankly though, their service is awful, it's not a nice process. It's a cost benefit of pricing vs service.

    Westpac's new calculators are terrible for almost everyone. Their promoted product looks good, but it's a honeymoon rate so it only defers the cost of an investment loan. They're also restricted to 80% for investors. There's better options out there.
     
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  9. Redom

    Redom Mortgage Broker Business Member

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    Also doing a fair bit for St George (NSW version of BoM). They can be worth discussing, good rates, longer I/O periods than some others, flexible cash out policy. Back end can be very poor for brokers, not so sure about front end service, i've heard some good things too.

    Although they just reduced to 5 years for PPORs - so this may count against them relative to what you're looking for.
     
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  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    Advantedge are generally pretty good with investors - they have a generous servicing calc, upfront vals and are ok with equity releases.

    They have recently capped sub 80% LVR equity releases to $100k though - unless you have suitable evidence to warrant more.

    Cheers

    Jamie
     
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  11. srirang

    srirang Well-Known Member

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    Thanks everyone. Have gone with Connective for the 2 refinances and the new apartment. Appreciate your help and advice.