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You can not claim back the LMI ..where do you guys get such incorrect information.
Its a bit like saying if you don’t have a crash or claim on your car insurance by the end of the year you can have your premium back.
LMI is not collected by the bank, it goes to an insurance company upfront who then cover the bank if there is a loss on your property for the ife of your loan. The lender is not in a position to refund squat.
Please don’t make untrue statements and represent them as fact…somebody may take you serioulsy and base a decesion on your incorrect advice.
Firstly, Pretty much anything the agent tells you will be a lie so ignore it.
Secondly, What you have to do is gain the upper hand and put them under pressure. If you put an offer on the place make sure you put a drop dead time frame on the offer i.e. say that unless they come back to you within 6 hours you will not deal. Otherwise they will hold your bid and see if a better one comes along…you need to stop them from using you as a backstop.
Talk tuff with the agent and he will go and work on the seller to get them across the line and leave you in peace.
All they want to do is get the place sold, if they see that you are firm on your price and prepared to hold tuff they will go and sweet talk the seller into dropping their price.
For a group that claims to know so much about specialsit lending they are way way off the mark on how builders finance no deposit, no legals type loans.
Not quite right…if you did hold your credit card for 5 years without default then the original enquiry would have rolled off your baycorp report and there will be no record of you even having a credit card.
Note: also the baycorp report shows that you made and application with a finance provier but it does not show if you actually took out the finance.
Keep in mind you can have a credit card, run it at max limit and pay the minium amount each month (and pay it late) withoout regisetering a default….is this a good credit record??
“studied” and “theories”…exactly waht i mean…yes traders are taking a view but not on interest rates, just where the next trade will be, they don’t care about the underlying product.
Hedge funds (the biggest sector of the market) don’t have interest rate views they just look to capture direction in the market.
BTW..my views come from 14 years as a interest rate trader in the financial markets.
“studied” and “theories”…exactly waht i mean…yes traders are taking a view but not on interest rates, just where the next trade will be, they don’t care about the underlying product.
Hedge funds (the biggest sector of the market) don’t have interest rate views they just look to capture direction in the market.
BTW..my views come from 14 years as a interest rate trader in the financial markets.
Stu…I see what you mean but in practice.
It is not so much ‘sellers of money” it more supply and demand and the swap market matches up the different parties. There are thousands of factors that feed into this market and the view of where interest rate are headed is only a very small part of this. (many layman books on the markets promte this idea but only because the author probably has never set foot in a dealing room)
As for internal cost of funds….fixed rate loans are swapped back to be a floating rate exposure and whilst the internal division may offer slightky lower cost of funds the mortgage division will have to the pay transfer pricing rate which is a function of and linked to the external market.
There really is no such thing as a credit history in australia other than a bad one ie. baycorp only register what credit you have applied for…nothing on how well you went paying it off or what a fantastic borrower you are, they do however keep a register of anything where you have defaulted.
Sorry to bust your bubble on how they set the rates. There is an interbank fixed interest rate market in Australia (called the Swap Market) that allows banks, corporates etc to fix there rates out to 10 or so years. They also use this to exchange money borrowed overseas into Aussie dollar exposure (cross currency swaps).
Fixed rate mortgages are based on where this market is trading not on some magical prediction from an analyst.
You can look up the rates in the Financial Review markets section every day.
And yes you can have 5 yr rates lower than 4 yr rates…it is called an inverse curve.
A few points to note:
Bluestone and Liberty are not private lenders, they are specialist lenders, but they source their funds from the wholesale capital markets (both here and offshore) not from private individuals.
As for only getting one go at submitting your income numbers…most brokers will tell you what income number to lodge to ensure you get the approval you want.
All the banks borow offshore and have done so for many years. However they then have to hedge the repaymnst via the swap markte which negates the bulk of the advantages.
Terry …that is example is not a 95% lend from the bank’s point of view…the way they see it they lent 80% of the value.
I assumed you meant “his current income + renatls” but his future income plus rentals will cover the repayents.
Keep in mind there are only 2 LMI companies left. 3 if you count the in-house one that St George use.
Have you tried some of the solicter lenders…however. I think they would struggle with teh 75-80 LVR’s.
TeasherK6….There are many inaccuraices in your post but let me offer some advice.
If you can’t get a loan in the current lending enviorment then you have one of two problems:
1) you are speaking to the wrong broker
2) you are dead.As for regsitering as a small business it is so they can get you a cheap lodoc loan and the loan made to you will be outside the Consumer Credit Code and therefore the mortage insurer will go easier on the applicltion, in fact one of the LMI companies will not do lodoc that is inside code.
As for your comments regarding the lender not wanting to see the lease agreements …that is pretty typical..they assume any house can be let quickly if the price is right. If it empty when you apply they can still estimate what a fair market rent would be.
As for your thoughts on “if you stuff up you lose the place” …a few facts to consider. There are a number of lenders who will lend you the money with no questions asked if you have the deposit (an asset lend)…however they charge accordingly as they can’t be certain that you will ever make a payment as they don’t know how much you earn. Plus don’t forget the bank does not stop a reposseing the house if you stop payment. They have the legal right to persue you personally for any balance that may be owing after the house is sold …..therefore they need to get a bit of feel for what risk they ar facing. Likewise they don’t like reputation risk …this is where they lend to somebody on a pension or similar and then have to evict them. The current affairs shows can turn this into a bank bashing sob story quicker than you can boil an egg.
Don’t fight the system…just navigate thru it.
All they are doing is lending it to somebody as a mortage at a very high rate so in effect you are still exposed to the property market …albeit with somebody eles’s equity under you (maybe not much) and in a pooled portfolio.
Yes many of these debenture lock you in for a long term.
WARNING: There is some seriously incorrect information in this thread…anybody who is thinking of trying access their Superannualtion money should consult a large, well known, professional accounting company before entering into any of the sturctures mentioned here. As for setting up a unit trust…the Tax office stopped that about 3 years back. And a fund that invests its “profits” back into deposit bonds for members ….please look up pyramid scheme in the dictionary.
Hint: just about anybody can access their super money is a short time frame and invest it or spend it anywhere they like but that does not mean it is legal or legitimate.
I’m sorry if I have offended anybody but there are some pretty shoody ideas in this topic.
A few points on the topic of US loans and fixed rate loans:
The US market can offer 30 year fixed rate loans as their wholesale capital markets take a different approach to funding mortgage assets and assume the risk that the borrower may refinace out of the loan before the 25 years are up…note: there is no penalty costs for early exit in the US and you can break a loan at any point and go into a lower interest rate loan and the lender takes the risk that he will lose future income …this is how the NAB lost $2billion dollars on Homeside …their US mortgage business. As US interest rates fell the borrowers refinace away and they didn’t do thier sums as to what this cost them in lost renenue.
There is a concept called “negative convexity” which any American 1st year uni text book covers very well but which they seemed to be unaware of.
Our wholesale capital markets do not accept this risk and look to recoup any lost income from the borrower.
As for the banks “just taking a guess as to where interest rates will be ” that is 100% wrong. There is a well established interbank market where forward interest rates can be traded out to approx 10 years (have a look in the markets section of the Fin Rev for “Swap Rates”). Any longer than this is difficeult in Australia.
Interest rates are genearlly higher the further you go out since about 1992 but there was a period where wholesale rates where lower the further you went out in years.
Will we move to a situation where we can access 25 year fixd rate loans???…maybe one day but it has been normal in the US for at least 50 years (probably more) and it is yet to reach here…so don’t hold your breath.
Erika.. LMI will be payable on your loan, I can only assume that the CBA has chosen ot pick up the tab for you.
The Reserve Bank makes it very difficult of banks to lend more than 80% without LMI by imposing a higher capital charge on the banks balace sheet. The non bank lenders chose to use LMI on every loan (but only charge the borrower for over 80%) as it allows then to lower theri cost of funds in the wholesale market.
