Hi there,
Just hoping to understand this better.
I have just attempted to increase my LOC (investment property) with Mac Bank. We intend to use the equity released as a deposit on another investment property.Depending on whether they agree with our valuation of the security property, we want to go up to 90% of the property value.
After putting in the application, I have been phoned to be asked that the application can go thru AFTER we have obtained the next investment loan. The bank guy says that in order to accept the loan, their credit team needs to know that we can service it. Wouldn't Mac Bank be the ones to decide if we can service the request increase on the LOC, not the next investment property loan? Would that not be for the next bank to decide?
By the way, we have increased our line of credit previously twice.
Until we know what equity amount we will be able to borrow as a deposit, we can't make the next set of decisions.
Can anyone shed some light on this?
No-one?
It can be frustrating and is likely the result of the new credit legislation.
Basically, lenders want proof that you're going to use the funds for the purpose you stipulate. In most cases, a signed stat dec will be enough.
However, for some lenders I provide them with a scenerio which explains how the LOC will be spent. I tell them that it's going to be used to purchase an IP for $x and demonstrate to the lender how the client can service the new investment loan.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Sep sorry old mate today has been one of those days with the number of loan enquiries, calls and emails at a record level
I think the issue is lenders are decliningg more deals than ever before so havent had chance to get to the forum questions until now.Jamie has hit the nail on the head.
It all boils down to the purpose of the funds with lenders want to strictly control the access to credit to ensure it is prudent and according to their lender guidelines. The old days of merely saying "Future Investment" have been and gone.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
thanks for you help.
As mentioned by Richard and Jamie. The way they are viewing it now is they want to be sure you can service current and future debts. So when you go and use the LOC for the deposit and costs on your next purchase and then take out another loan for the balance to complete they need to be comfortable that you can service the entire debt even if not all with them.
If you can't service the entire debt their loans are at risk of default too. Under the rules they also shouldnt have given you the LOC increase in the first place if they knew that you were going to overextend yourself in the future. Tough I know but thats the thinking.
One way around it would be to submit an AIP for the investment property (possibly lower than you actually end up buying for) at the same time as the LOC increase. Then use another bank for the invetsment property loan. Problem here is they may still ask for a contract before increasing your LOC and t adds another credit file enquiry to your file.
Marty McDonald
http://www.mortgageexpertsonline.com.auMarty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone Me
You must be logged in to reply to this topic. If you don't have an account, you can register here.
