Forum Replies Created
They might want to be white knights but they have no control over their cost of funds.
Its not just RHG. People got screwed with RAMs, GE whitelabel, Challenger, wizard, first mac and plenty of other non banks.
When I say screwed, not all these lenders have the heavy DEF however they all promoted cheap rates however after the GFC ended up more expensive than the majors. Most people don’t realize that brokers can earn up to 1.5% upfront commission which is more than double what the banks pay. The lender claws the commission back via customers as opposed to the banks that claw commission back from the broker if the loan is paid ou too soon.
If you can get a loan with a bank why on earth take a loan with a non bank lender??? Usually it’s only the broker that benefits…
CBA and Westpac are won’t do this via broker channel / retail bank.
Major banks are usually OK for a standard investmet loan in a unit trust however you might need to apply via business banking.
In most cases you need to go direct :- not through the broker channel.
Sounds like Cba.
The issue is that not all banks computer systems recognize weekly / fornightly repayments. CBA only has monthly in their contracts.
This is why Cba fornightly payments are actually the monthly payment devided by two. You are simply in advance for the first half of the month / paid in full by month end. Due to this you pay an extra repayment each year (26 payments). The loan comes down a few years so it is no longer a true 30 year term.
BankWest for example have a more modern system. They calculate true 30 year terms based on fortnightly repayments. The loans have actual calculated fortnightly repayments for a 30 year term. The extra annual payment does not exist with this option therefor the only benefit is approx 2 weeks offset of your repayment per month.
I’ll work ou the offset benefit and post an example. Offset benefit is bugger all ( another banking myth)…
PS. You are not comparing apples with apples. You are looking at different loan terms.
You say melb metro : what suburb?
Make sure the apartment meets the mortgage insurers security requirement. In some cases 95% might have restrictions e.g. Must have own laundry facilities etc, minimum size requirements etc.
Qlds007 wrote:Banker wasnt refering to TCU.NAB Advantage rate with no applic / valuation or any ongoing fees is 6.55% or 6.45% less than 65% lvr.
I see. Thought you were talking about TCU. TCU is not cheap then . They simply havnt raised their rate yet…
Qlds007 wrote:You can stil get 6.45% (post May rate increase) with No application / valuation / lenders legals fees.
No monthly or any ongoing fees.
I just called them. Rates are being increased effective this coming Monday : not yet include in the advertised rate. Rate will be approx 6.7%. Fees do apply.
You can get cheaper with the major banks.
I just checked the site. Teachers credit unions rate is as of 14 April. The reserve lifted rates on th 4th may. Banks followed suit on the 4th. May. Not sure if it includes the rise or not…
I actually found out recently that non of the major banks, and as far as I am aware any of the second tier aust banks actually have an all monies clause in their contracts. They were removed over 10 years ago from the contracts but still exist in some commercial facilitites. They are somewhat of a commonly quoted myth.
I would double check the rate quoted. The other major 3 are all cheaper than Westpac, you might find only 0.1% difference to the credit union which is bugger all when you do the math. Banks are far more flexible.
I’ve recently won business from teachers and police credit unions and neither could match current bank pricing. In some cases when you have a rate rise the banks pass it on immediatly however some non banks hold back a fortnight: makes sure you are not comparing one pre last rise and one post last rise or you might be disappointed.
Banker
Just make sure the loan is split so you get two statements.
There are also a few tricks re lenders that don’t lend to trusts.
For example: Westpac, as per broker policy, cannot lend on a home / investment loan to a company as trustee for a trust. This is because their doc prep team in Adelaide print all the docs for brokers. If you go direct to a branch however they can print the docs locally – allowing them lend to a Company and Trustee when dealing with clients directly.
Brokers can still get around this however it’s more a matter of who you know – a lot of brokers simply can’t offer this structure via Westpac. CBA for example will not let a company take a Viridian line of credit. However if submitted with the borrower as the trust and the company as a guarantor – credit allow it…. When the docs are printed they reflect the real structure e.g. company borrowing as trustee for the trust.
Was it due to the valuation coming in low or the banker entering the wrong valuation figure?
The first is common with off the plan properties, student accommodation and new complexes however the second would simply be an error on the bankers part.
Guide only. Might be right for first home buyers without multiple income streams and liabilities. If you have a few properties it won’t work.
Most lenders need it to be interest only. Base on a fixed rate (not variable rate of the day).
Therefore say you have a loan of 200k, 1 year fixed rate of 6.5% = $13,000 interest.
The $13,000 is charged in a lump sum – therefore deductable in the tax year it is charged. This means that if you were at the end of June and already had almost a full years interest paid, you could pay the next years interest: – providing almost 2 years interest deductions in that financial year. This triggers a bigger loss and therefore a bigger tax rebate. Problem is the next year has almost NIL deduction for interest – unless of course you prepay again. This is where Terry refers to it being good it if you have high income this year, low income future years.
This is also good when via a discretionary trust, by promoting losses and carrying them forward profit distribution can be delayed several years. Handy if one of the beneficiaries expects to have children in the future but is on a strong income now.
thecrest wrote:Would you please name some of these specialists ?
St George dried up in very poor style this week, so we need to make a move.
Any ideas would be appreciated.
Cheers
thecrestAll of the majors lend on leasehold motels – for the right deals. So does BankWest. So does St George.
The first problem you will have is the amount: – 100k will barely get you in the door to see a business banker let alone a specialist. You would need to have accountant prepared cash flow forecasts and a well prepared business plan. Preferably some experience in the industry. Generally lending will be limited to the term of your lease.
Yoss – you are wrong…
if I follow this link it has the word consumer stamped all over it. Seems like you just want to argue however all I am pointing out is this is moving more towards what we have in commercial (not saying it is exactly the same)..
Re your comment re Dunn & Brad St: on a company you can get reports far more detailed than privacy laws allow you to for a consumer file e.g. Number of employees, who they bank with and how long, customers, supplier, Backgound of what the company does etc etc. This info is not currently available on a consumer credit reports.
You are right and Im not debating that positive report does not exist in Australia for consumer reports. If you think getting all the info I’ve mentioned above is not positive reporting then what on earth is it?
Even if you don’t call it positive reporting, bringing in positive reporting for consumers will be bringing consumer underwriting standards and availability of info closer to what is currently in the commercial sector.
OK Yoss, so it is positive reporting however as I've said this has been happening in commercial for a long time.
On Dunn and Brad Street you can get all sorts of info on a client including but not limited to: annual turnover, number of staff, term with existing bank, major suppliers / customers etc.
Is this not positive reporting?
Are you telling me these things don’t affect commercial risk grading, underwriting and pricing on commercial deals???I don’t see the point in posting back and forwards re the technicalities – all these things are already in the commercial market. In the commercial sector you don’t need Veda – you need Dunn and Brad Street along with detailed aged creditors / aged debtors etc. Banks monitor ratios that show if debtor / creditors days have increased or decreased – this indicates if they pay bills on time or not.
Questions is whether this type of assessment is coming to the retail sector…
Yossarian wrote:(a) What % of US borrowers handed back their keys prior to defaulting? Source?
(b) Same incentive exists in Oz. Borrowers in strife and with negative equity rarely have other assets to speak of (or have protected them from bankruptcy proceedings) and for most people, bankruptcy in Oz has arguably fewer long term consequences than destroying your credit record in the US.In fact, if you actually speak to your risk analyts, you will find that a negative equity position is a very strong predictor of default.
(c) Poor credit decisions were the root cause of the credit losses, as they always are.Hi Yoss,
A: I’m not going to look for a percentage or a source as I never quoted one. You will note that in my original post it says in the top line "In my Opinion”. If you want to Google the topic you will find there are plenty of people that agree with my view on non-recourse lending. Re: people handing in keys before they default -. I don’t think anyone (unless you want to) will argue that people in the US have not been voluntarily handing in their properties to satisfy their debt.
B. Yes negative equity is a cause of concern however it is not so common here. If the market crashed by 30% I'd rather own a mortgage backed security made up of recourse lending rather than non recourse lending. There are plenty of articles / opinions on the net re the belief that non-recourse lending enhanced the US crisis – trying to prove this impossible.
C. Yes. Poor credit decisions cause problems – that’s a no-brainer. As I said above my opinion is that non-recourse lending was a fundamental floor in the US banking system and I have no doubt that it had an impact in the downturn. How much of an impact is of course debatable.
