I have been talking with a broker over the last couple of weeks who can supply wrap finance. As of yesterday he has backed off on being able give suitable finance on the following basis.
The finance company has increased it’s rate for wraps to 9.2% rather than the norm of 7.76% at which he had been writing them.
The reason being that the finance company has a new CEO and in his opinion the company’s loan register was running at a too higher risk level. Having written a large amount of business at 90%LVR.
My question are….
1.) Can anyone suggest alternative warp lenders @ the 7% range. Contact details would be appreciated.
2.) In this case adding a 2 to 3% spread on the interest rate would be to high to offer in todays market. Your thoughts.
3.) This change of heart by the finance company due to exposure could be followed by others. Again what are your thoughts on this as a possibility.
Cheers
Gary
[
]Hi Gary
On first instance you go an extra 1.5% just because it is a wrap.
However, if they give you confirmation they accept the concept then you are ahead of what a lot of people get to. Lots of banks / brokers are not even able to find someone who can do wrap finance.
With regards to the extra rate, is the cost of finance the issue or the availability of finance. Would you rather borrow $100k at 5% or $1 million at 7%.
If you can borrow for a wrap and make money, what do you care what the rate is? Especially, if your purchasers rate is linked to yours.
Overall, I tend to try and look at things as half full not half empty so maybe I am being too optimistic.
Dave
Gary,
Can you please shoot me an email as I am interested in finding out who the lender is even if the interest rates are high.
Regards,
Jason
[email protected]
0412 616 848Property Trader | Boston West Pty Ltd
http://bostonwest.com.au
Email Me | Phone MePrivate money lending opportunities available paying upto 12%, secured by bricks and mortar!
It could be Liberty Finance! They ahve indicated to me that they will do wraps on their normal rates (which are usually higher than standard rates by 1 or 2 %)
Terry
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
My guess is GE.
I started an application with them 3-4 weeks ago. At that time their rate was 7.74%. In one week it jumped to 8.? % and then 9.2%.
And just to REALLY cheese me off (I was still making a reasonable spread at 9.2%) – they then told me they would no longer do 90% LVR in the area I had bought in. GRRRRRRRRRRR
I could cope with the higher interest rate and reduced spread, but if I have to find an extra 5% every time, the return drops quite a lot. It started out as something like a 50-60% return on my cash, then dropped to low 30%, now it’s down to just over 20%. At this point I’m saying yes but trying to source finance elsewhere as a possible last minute replacement – borrowing 80% LVR at 6.24% is at least nearly 30% return.
Sorry to waffle on so much!!Keep smiling
FelicityWe have wrapped 8 houses so far in NSW. We are also mortgage originators. This means we can access wholesale funds and, depending on the lender, the funds can be provided for wraps. Obviously each lender has different criteria and their rates vary but overall, the funds we can provide for wraps are at similar rates to funds for rental properties. If you are after a no-docs, 95% LVR, wrap loan you’ll pay a bit more! [
] So, shop around and do not accept “no” for an answer.Hey all,
Long time no see. I have been talking this week with a mortgage originator who is happy to do fully disclosed wraps….you know the worst part they want to charge me only 6.09%….yes that is not a typo. This is full disclosure and I was very impressed as they really do understand how it works. There are application fees but they will be passed onto the client ($600). Any one want any info drop me a line and I will point you the direction I went.
Hope this helps.
Enjoy
AD [:0)]A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithSorry,
Forgot Email address. For those wondering why I didn’t just write the lenders name it is because I want to ask them if they don’t mind first and they have all gone home as I write.
Thanks
AD [:0)]A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithHere is another wrap lender!
I am a mortgage broker in Sydney and did some training with ING last week. The trainer stated that they are willing to lend for wraps. However I have heard from other banks that it is the Lenders Mortgage Insurance companies that are the problems in that they won’t approve loans for wraps.I think it is much easier if you use a lease option instead of an installment contract. Then you have no problems with disclosure.
Terry Waugh
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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