Forum Replies Created
Mills,
I believe that becoming unemployed would not be something you would be planning for. It would not change the variation too much though, as your main PAYG income is what the variation is applied to ie no salaye, then what are you varying? You would not be paying tax. If you resume your employment and your annual income drops as a result of the jobless period, I suppose (important to remember this is all just opinion) you should scrape through without too much drama.
I understand that they are not in favour, and each broker will make recommendations case by caes.
Taking into account the international banking climate and the uncertainty that has occurred in the last 12 months, ING's stability in the global makret should be its biggest selling point. It is a very very strong balance sheet funder, and a stable proposition in the face of a lot of uncertainty. ING cartainly has it's pros and cons, ans I do not have any loyalty to one particular institution, but it is my opinion that ING and other non-banks will start to gain a bit of traction in the market as banks continue to cut comissions and place increasingly unrealistic rectrictions on brokers in general. I know it is unfortunate to believe brokers will recommend loans based on the comission they will earn (which I certainly do not do), but finance broking still needs to remain a viable commercial concern, and with changes like Suncorp instituted recently (ie cutting upfront comission to 0.3% and no trail for 12 months), some, if not most, banks will simple be take off the menu.
The industry desperately needs for brokers to support non banks, and reduce their misguided loyalty to the majors. It is the brokers and non banks that keep the market competitive and rates reasonably low.
The DEF fee is not the only important part of determining a suitable loan for a client. If brokers were truly doing their jobs, the DEF fees would not be an issue as most loans are fully portable these days anyway, For only a few hundred dollars, hey presto – nel loan product on a new security property (unfortunately, this method meant the broker does not recieve another upfront comission – so it is seldom used).
Either way, I see your point. The brokers on this forum seem to be focussed on the majors, So be it. I tend to try and keep an open mind and give each and every client an oppen slate to start with, and narrow down their options from there.
Cheers.
ING are one of the largest banks in the world. Substantially bigger than any of our 'socalled BIG foru'.
The products are good, they have a lot of flexibility but the drawback is exit costs. This should not be held against ING, as they write a lot of wholesale business, and the DEF fees are set by the Mortgage Managers to a large extent. Just make sure you plan ahead, and keep your options open should you intend top sell shortly after settlement.
ING are very good to deal with, and as a long term proposition are a great option.
There is nothing wrong with telling the bank that you have borrowed the additional money. If you wanted to try and get creative, you could just as easily have told them you took out the PL to invest, and declared it on the app form anyway. As long as your income could service all your liabilities, there would have been no problems.
When you sing a document that says you have declared true information, it becomes binding. When that document relates to an application for finance from an ADI, and you have not been truthful, it is called FRAUD.I am not calling you crap. You are just uneducated as to the rules, and the reason the rules exist. It is nothing personal.
I do not like to jump through hoops any more than the next person. I despise the banks.
Either way, the real case in pint here is that the original member that posted the question got a range of answers from a range of people and can make a decision based on that.
Being knowledgable in the industry, I just felt obliged to inform the original poster that your advice to break the law (not to mention possible get someone in a loan they can not service and cause great financial hardship) should not be followed.
I wish you all the best with your 'strategies' on investing.
If you would like to take your investing to a more sophisticated (and legal) level, I am sure you wil have plenty of help from the members of this forum.
I hope you have a great day, and as I said – All the best.
Variations are not an exact science, and as such you should be fine as long as you are using accurate information and estimations. I believe the penalties will relate to deliberate manipulation of the figures for your benefit.
As long as you are within a reasonable range of accuracy, and you square the figures up at the end of the year, you should be able to avoid the big stick.
Have a great day.
Tim
Wow. This thread got way too complicated for such a simple question.
Carlin, if you would like some good advice, don't listen to anything that Cattleya said. It pretty much all adds up to crap, and illegal activity.
There is no calculated risk in lying to the bank (and by the way, non-declaration of current liabilities IS absolutely fraud and is against the law)
Having 'all your loans on p+i is also not ideal, and further reinforces why noone should listen to you.All Carlin wanted to know was is borrowing up to 80% on your current property (equity release) and using those funde to place a deposit for another purchase for 80% is a good way to avoid LMI.
The answer is yes. That is a standard and intelligent way to finance the purchase. And avoid LMI if all the figures stack up. The other point to consider is that you must ensure you correctly disclose the limit and balance of your current loan when applying for the new loan of 80%. Also ensure the increase loan to your existing property is set up as a seperate split to keep your accounting simple.I hope this helps answer what is ultimately a simple question.
Have a great day.
I would think you should be able to screw them for 0.6-0.7% without too much drama.
If you are not a confident negotiator, try this –
Call up and ask for a payout figure, then their retentions team will call and try to give you a better deal. Tell them the competition is offering 'x', and you are very upset. (Prior to this, check out ratecity.com.au and see what the lowest rates are)Tell them you are out of there if they are not able to keep your loan in line with other offerings and they should help you out.
Have fun
I hazard a guess it has come through only certain channels, as I can still place 80% Lo Doc through ING today.
The trick is, ING have a tiered ranking system for mortgage managers, and they offer different thing to different companies. If you are not on the top of their favourites list, then you do not get the full gambit of loan products.
Taking into account the Commercial lending landscape in recent times, the fairest rates at the moment are anything under 10%
Focus more on finding a funder that actually has money, and save yourself the unnecessary heartache of valuation fees and application costs chasing the bottom dollar rate.Go where the money is.
Is that a rough ball park figure when I have 3 credit carda and a novated lease coming out of my salary, or without.
I prefer to go with Richard on this one, and ACTUALLY find out the figures before hazarding any kind of random guess.
The details are what makes it fun.
Loan Ranger,
You are correct. They have ridden out the storm, quite deliberately, and they have launched a 3.99% 1 yr Fixed Offste laon off the back of recent Government RMBS purchase. A great way to come back into the market with a bang.
FMC have just been treading water for a whild, and being selective about where to utilise their money.
Also, God of Money, if you don;t understand the need and usefulness of Lo Doc laons, and you genuinely believe they are the root of all evil then you should probably change your name to 'Moron of Money, because that is the extent of your understanding of lending.
Lo Doc loans have been abused by brokers, I agree.
I also agree that there have been a lot of people that have used Lo and No Doc loans to get finance they should not have, however there have been only the rarest cases of any of our banks actually losing capital with these loans. This is due to the 70-80% LVR guidelines.
Banks have lost far more capital on loans to morons with PAYG jobs not declaring debts and dependants and being able to borrow 97% LVR then the whole house of cards come falling down when they have their 20th kid and the baby bonus does not help them catch up on their mortgage repayments.
Also consider –
Self Employed 'token Tradesperson' earns $120,000 p.a.
He has several deductions, as his home contains storage facilities and an office, tools, fuel, power, phone, etc etc.
After his accountant legitamately deducts his expenses, he is left with a taxable income of $60,000.
He pays tax of approx $12,600 (note This is not exact – just an example)
His tax returns, as assessed for the bank, show his income to be $60, 000, and he does not service for his new home loan application. Application declined. Sorry sir, can't help you.
orHe uses a Lo Doc Application form, declares his actual income figure and his family gets the house. I would never recommend that anyone declare a figure that was artificially inflated, but in this case, and many like it, Lo Doc loans are necessary to achieve a fair result. If he was required to declare all his income to the ATO just to show the bank it exists, he would pay almost $20,000 more in income tax just because some moron in a room somewhere decided that all Lo Doc loans are for liars.
Lo Doc loans are perfectly legitimate loan types, and within reasonable LVR limits, expose banks to no more risk than any other type of loan. If you can demonstrate any FACTS to the contrary, I am all ears. Or should be expect to see you posting under a different screen name soon?
Have a great day.
No they have not Terry.
There have been LMI policy changes that will make borrowing more difficult for most Lo Doc loans from 60% – 80%, but your statement above is incorrect. Maybe that information was passed on to you via a misinformed party?
ING will still lend to 80% LVR, subject to LMI approval.
ING will lend up to 60% Lo Doc without LMI cover being necessary.All the best.
I just wanted to chime in with my two cents worth.
I agree with the well articulated responses above. CC is, and should ramain, avoidable in almost all cases. Keeping your properties seperate shouls always be the preferred option. By doing this, you are not protecting your assets, but you are protecting your position of control over your assets. Asset protection is a myth, but it important that you hold the cards if changes need to be made.
This become a lot more relevant when it involves your family home. The last thing you want to do is start with a great plan and a lot of equity, and end up on the street with a whole heap of 0 equity properties and looking for a place to rent.
If your single CC portfolio is with an institution that has a big policy shift ie Check vals annually or similar, it leaves you exposed to the whims of that institution. Spread your risk, and use different institutions.and also………
People that do not understand why you have to reduce residual debt are not smart enough to use words like 'elucidate'.
All the best.
Syd,
Providing you do not have any major credit default issues, then the information you have provided means you can go pretty much anywhere and get yourself a loan.
Rather thasn send me a private message, I will just give you some advice for free.
Decide if you want to be able to reduce your loan over the next few years. If the answer is yes, make sure you get a loan that has a competitive rate (not necessarily the lowest rate) and has the features you will need to accomplish your goal.
If you can secure a good deal, try and use a broker wherever possible. You just don't get the same kind of advice from the bank. They will never go out of their way to tell you have to save money, becaues it is them you would be saving it from.
Deal with someone you are comfortable with.
If you have a consultation with the bank, and the person you are dealing with does not ask you the following questions as part of their assessment, turn around and leave. All they will do is apply band-aid after band-aid to your financial situation.
Decribe your spending habits?
Are you able to save money each pay period?
How quickly would you like to pay the loan down, if at all?
How long do you plan to live in the property, if at all?
Do you have plans to purchase additional property? If yes, how long?
These are just basic questions, but can have an impact on what type of loan will suit you.Good luck.
Fixed rates do not necessarily affect variable. If anything, it is the other way around.
The banks will have their teams of eggheads locked in back rooms studying what the market is likley to do, and then price their fixed loans accordingly. This allows them to hedge their bets on rate movements.
The best thing about them is that they are a very good indicator of what the variable rates are likley to do ie if you see banks dropping fixed rates all on their own, it is a good indication that variable rates will come down not too long after. Vice versa also applies. Fixed goes up, varialbe rates are likley to go up too.
It is a very reliable method of anticipating short term movements in the market.
All hail the eggheads!
I think that the writing has been on the wall for a while, and the debt based economy we have been operating for some time is now becoming clearer to more people.
It should be a great help for those in property and finance industries, and I sincerely hope it has the desired effect of more jobs and housing market activity.
Bring it on.
Great post Terry. Well backed up and informative.
That information should come in very handy to all the brokers and borrowers out there that ues this method, or use a 'Cash Flow' Style loan to run parts of their portfolio.
Keep up the good work.
Tmi
Duck,
You should read more carefully before replying to some posts. The LOC comment above was referring to a LOC on the Investment Property, not taking out a LOC on the O/O to put a deposit on the IP.
Also, I am well aware of the reason not to cross colateralise the properties, which is why my comments 'assume' nothing. What I wrote was to take out an additional split on O/O to get the deposit funds, and then borrow the rest for the IP. Nowhere in my post does it say to cross collateralise the properties. Rather than commenting I assume something, why don't you read the post a bit more carefully first. Thank you in advance for your assistance.
626 posts and still you can not read properly is a bit of a worry.
Cheers.
You may not need to resort to private funding. It all depends on your business operation, Assets, security and cash flow. I would like to assist, but a more thorough assessment would require a fair bit more information.
Please feel free to contact me via email if you would like some further assistance.All the best.
Tim
