Forum Replies Created
Most banks allow you to have as many loans as you like. Simply get a second loan as a variable rate and leave your current loan in place.
Banker
2nd mortgages/ caveat loans in cases like this are very expensive. Could be 10% or more on a second and even 5% per month in some cases on a caveat loan.
The main thing is keeping your lender up to date with your circumstances. I've seen people struggle in arrears for two years with major banks and never get defaulted or foreclosed. The banks will assess you as a retain or exit category. Retain means they will assist you to get through. Exit, well…
Assuming you keep everyone on side and keep your credit rating clean. Most lenders will ask for 6 months statements when you refinance: – therefore you need to keep your nose clean before you can refinance.
Alternatively look at someone like Liberty Financial (through a broker). They can approve with arrears etc as long as you can prove you are now back on track.
Note: – if the funds are for personal use e.g. consumer debt, second and caveat lending might not be an option. Investment debt is a little easier.
Hope this helps. Good luck…
Property:
550
650
700
Total 1.9MLending
530
400
700
Total 1.63MLVR 85.7% (1.63/1.90)
Accross the board gearing is getting high. I would assume your current IP is crossed with your current PPOR as the loan / property value is too high to be standalone. This indicates you can’t simply get a depoist against your PPOR as the equity already supports IP one.
Don’t think the problem is cross collateralising. The other alterntive would be to have a smaller IP loan and extra loan or line of credit on the PPOR, so equity is already tied up either way.
Assuming servicing stacks up you could do it but would pay LMI (lenders mort insurance).
You don’t need to cross collateralise any further. Maybe 90% on the new property and the balance on the other two (split those securities later when you have more equity).
That’s equity coverred. I don’t know if you can service on your income though…
Banker
There is no reason you cant get an entry level job in finance e.g. Work as a loan processor in a broker firm or processing centre in a bank . Mobile banking and broking is largly a sales role however. If you want to make sales / make money best to get some hours working behind the scenes. At least you will learn a few tricks before practicing with peoples money…
Keiko,
Its a case by case scenario. I was recently involved in a development deal for 20 units. The clients borrowed it’s core debt (with a major 4) and raised the balance through a second. The second was placed by a company that was set up specifically for this deal ( a group of investors).
The first, second and third questions from the banks risk and property specialists related to the clients “lack of hurt money’ in the deal.
In your case it will also be an objection. If the overall deal is not strong (in the banks eyes) they will knock it on the head. Whether or not you get it approved will come down to your ability to overcome their objections.
If you worked in business / commercial banking, It’s the sort of deal you would get approved for your top 20 clients any day of the week. These are clients that hold all their banking with you, have all their accounts and insurances etc with you and provide plenty of reveue to your portfolio.
New to bank clients and dry lending is the hardest to get any concessions on.
p.s. Dry lend is when client wants to keep their core banking elsewhere. Now that banks are focused on ‘revenue’ rather than ‘money out the door’, bankers are encouraged to avoid dry lending.
Property is not an asset you should expect Cap growth over a 3 year period. Might be up. Might be down. 3 years is speculitive.
Too many people focus on housing shortages as guarantee growth will continue. I would say is aust it is more a matter of avaialbity of funding.
E.g.
10 people at auction with approvals ranging from 440k to 550k.
10 people at auction. 3 can’t get finance and the other 7 have approvals from 350k to 450k.Same supply and demand. Less money in the financial system.
Rates have increased, default rates are increasing, uncertain times internationally.
My advise is not to be too aggressive on your gearing, make sure your cashflow is strong and focus on 10 year hold stratergy if you are relying on cap growth.
Re the gearing. I don’t mind being in debt up to my eye balls. Key is to understand the risk. Don’t gear up to the eye balls because you think you can’t lose in property.
Banker
Ps also assumed credit card was closed and income was split 50% for tax purposes.
There are a few variables so take it with a grain of salt.
Banker
Total property 1.2M
Total loans 930kTotal lending is currently at 77.5% (930k/1.2M).
Funds availalbe is approx 30k if increased to 80% (960k).With the additional income from the 2nd IP my figures would show servicing is boarderline but that’s assuming no kids or other debts.
Gearing is getting high which obviously means higher risk.
It’s a maybe from me…
Hi CK,
Each loan contract has a Security Schedule (usually towards the back). The properties listed in the Security Schedule are security for that loan. If all your loan contracts list all your properties you are fully crossed.
You might only need variations to 1 or 2 depending on when the loans were set up.
Have a look at the schedules.
BankerNope. Did one recently with CBA. I think what ANZ is saying is MAX 80% LVR – 1st and 2nd combined.
Hi Terry,
You can use the app with a Nokia but you will need to of them.
Simple point at the house, rub them together and say “I think I can I think I can.”
If it doesn’t work try the next house.
Banker
Hi Newday,
I'm of the opinion that not x-collateralising in more hype than substance and it will come down to your preference. Examples below ignore stamp duty and costs and assumes purchase of 300k (rounding to make it easier).
OPTION 1 – Not crossedExisting home loan – 20k (against PPOR)
Investment loan – 60k (against PPOR)
Investment loan – 240k (against INV)
OPTION 2 – CrossedExisting home loan – 20k (against PPOR)
Investment loan – 300k (against both properties)IF YOU SELL YOU PPOR
Option 1 – you need to payout the 20k loan and the 60k loan. Leaving only 240k (80% of the inv)
Option 2 – you need to payout the 20k loan and 60k of the 300k (reducing it to 240k – 80% of the inv). The end result is the same. Refinancing the PPOR will be the same.
RISK IF YOU CROSS
If you sell your PPOR and the investment property has reduced in value to 280k. The bank may ask you to reduce the loan to 80% of the reduced value of the investment. If you don’t understand your loan structure this can be confusing.
NOTE: If you cross. After a year or two the bank can revalue the investment. If your investment has increased in value and the loan is now 80% of the new value you can have all other security released from the contract.
Banks call this a partial discharge and it is usually free.Regarding your bank being one of the major 4 – they can all do it both ways – your manager just cant be buggered. It should be your preference.
Let me know if you have any questions.
Banker
Last I heard Cba were out e.g. Lvr NIL. Westpac were saying no and ANZ were reviewing there position. Maybe someone else can answer.
Hi Paul,
You’ve given the names the loans are in but not titles?
Can you list relation of family members to each property?PPOR and IN1 are worth total 940k. At 80% this is 752k freeing up to 187k. This is ignoring equity in other properties (noting your post indicates they are not crossed).
Will you all be applicant or guarantor for the new loan?
Note; yes, total loan is included in bank servicing If you apply in your own right. But the banks can take adjustment in to consideration. E.g.
Debt servicing; fail
adjusted debt servicing; passcomments; your banker or broker need to complete a strong argument as to why you can service the debt. Depending on your bank; there is sometimes room in their system to include a ‘related party’. This means they sign a privacy statement and provide income details for assessment however; are not an applicant or guarator on the application.
Listing them as a related parties will allow a credit officer to assess their capacity to contribute to servicing the existing loans however not
Actually be an applicant or guarantor on the new loan. Unless the bank can see the related party income they must assume you servic the entire debt.No. One against the purchase – standalone.
The other against the second mortgage.Sorry – my posts would come across as putting Hans down but it’s not my intention.
From my experience, lack of experience is one of most crippling factors in the industry. It also affects the viability of a good brokers business by blocking lenders turnaround times with crap deals (one bank recently saying they need to rework 70% of broker applications versus 30% of their own).
You can google or read this site for hundreds of complaints where people have been let down by bankers or brokers. People have lost money, lost their homes and in some cases families have separated due lack of competence and experience of their advisors.
To clarify to Heathers questions, what you need to do to get into the industry?
The answer is not much. There are people out there that are looking for people with no experience.
The other thing to keep in mind is your expectation.
One of Australia’s leading aggregators recently announced settling more than 800M per month. The second time in the history of the company. Shared between almost 1200 members at say 0.6% this is $4000 a head before the brokers pay their fees and charges. And thats a good month! Unfortunately the top 20% of their brokers will take the lions share leaving the average broker with a measly income.
Hans,
Sorry to pick on you. However there are a couple of posts you have placed where people ask questions re finance. Your reply is “do it yourself” with a caption in your signature promoting NIL experience?
Above you say you bring on accountants and planners rather than truck drivers?
Maybe clarify your market – in my view, if you promote your business in an on-line forum expect people to question or poke sticks at it.Re your quote above “As a banker, you might want to triple your earnings”. I think you’re a little of the mark. Terry has the best advise I’ve seen on this post – heathers – sounds better if you were to just join a bank!
At a starting point of 70k for a mobile banker you your guys need to make min 210k to give your statement an credibility. Bankers also get bonuses.Maybe brokers with less than five years experience should have a ‘P’ on their cards. OR at least get the clients to sign an acknowledgment that they understand their broker is still learning?
Don’t know about tripling your earnings;
Firstly I don’t work in a bank however I am a career banker. Retail, Corporate and institutional banking – mid to senior management.
Secondly some of the leading bank employed mobile lending managers (retail) are earning 500k plus. It is very easy in banking to reach the 100k mark and there are far more bankers settling 100M p/a than brokers. A lot of business bankers earning 90 – 130k bases plus bonuses up to 100% of their salary (even in junior management roles)… The best income in a bank is either at executive level or leading retail mobile banker (p.s. They also ge trail).
When you talk about average earnings in a bank; you get say 70k as a starting point as a mobile banker or branch lender. Plus car ph and super works out to close to 120k if your were self employed ( by the time your pay your own expenses etc). The better you are the higher it goes.
Brokers need a strong network, good understanding of accounting and legal structures and there is no doubt experience goes a long way.
There are a lot of companies that have taken your approach before you. Most of them failed or have now cleaned out the inexperienced staff and now focus on proven quality.
Who takes responsibility when one of your guys stuffs up?
What do your guys on average make p/a?Banker
I’ve spent the afternoon walking down the street pointing my phone at houses.
No. The approval indicates that you should be OK assuming your circumstances do not change.
Even with a 3 – 6 month pre-approval or any application. If the bank does employment checks before settlement and you are not employed they can pull the pin:- or at least ask for more info.
A loan is not unconditional until funded / settled.
I’m not sure. I think between $180 and $250 for a normal Val. The link is a but hard to find.
