Greetings all
It seems its common practise to lie on an application of a No/Low DOC loan to get more money on a mortgage.
What are the consequences of this if caught out from the bank? I have spoken to the ATO about the subject and they don’t care as long as they are not being lied to. Where do we stand with the banks? Assuming all payments are made and kept up to date?
Regards Bear
Bear,
Good question…..
On most loan applications there will be a clause that in effect says..”You agree that all the information provided in this application is true and correct”…and you sign it. Almost like a Stat Dec.
I don’t know the legal ramifications to this but it seems that if you lie and are subsequently found out, then the bank may be able to recover the loan monies by whatever means…
I think we all need to memorise this sentence….”I have no recollection of that event”
Best to get independant legal advice, just to be sure.
Also make sure you separate (protect) ALL of your investment properties as other properties may be taken to cover additional legal/closing costs for the Bank.
Good Luck.
Milkman.
Thanks Milkman for the adivce!
How does one protect ones other assets?
Regards Bear
Also make sure you separate (protect) ALL of your investment properties as other properties may be taken to cover additional legal/closing costs for the Bank.
Good Luck.
Milkman.
[/quote]Bear,
Your accountant is better at providing the answers about asset protection but it involves setting up trusts and companies so that there is limited/No liability and exposure. Can be expensive to set-up but this should be weighed up against the risks involved.
There is also clauses in loan contracts referring to “ALL Moneys”. This means that the bank can attack any asset you hold in the same name as the loan contract. A mortgage broker or solicitor can explain this better than me. There have been instances where this clause can be removed in a loan contract, the Bank may have to re-think their exposure but I have heard of some successes.
I am currently looking at “Asset Protection” and tax benefits before I start my purchasing splurge.[
]Regards,
Milkman.
So don’t lie.
Some LODOCS don’t ask for an income but rather ask for certification of affordability.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I could be wrong, but my understanding of an ‘all monies’ mortgage was that it meant the bank could go after any security that you held with that bank. Therefore if you have a mortgage on your residence and a separate mortgage with the same bank on an investment property they can sell up either proporty to receover money. As an example, if the investment goes kablooey and you default on the loan they can choose to sell either house to receover their money. As your house is probably better that the investment one and is also worth more (and should sell easier) that’s what they might sell.
Can somebody clear this up?
Boneman,
That sounds about right…again it would be better if someone with some legal experience can post a reply.
Milkman.
Boneman
Thank you for ur input!
Yes u are correct and for this reason it is recomended when investing in property u take out loans with some one other then the instituation that u have the loan from for your personal home. I hope this makes sense….LOL
Regards Bear
Hi All
The lenders have a right to invoke the Doctrine of Consolidation. However, the borrower has the common law right to object and the lender can only consolidate on limited cases (e.g. parties to mortgage have to be exactly the same). There are ways to protect yourself (e.g. wife & husband on one loan and husband only on invt loan).
Re: low docs – Don’t lie – it is illegal to lie on a loan application (regardless if is full or low doc). This is fraud.
If the banks won’t lend you any monies then its probably for a good reason.
I know, I know… the banks are too conservative… you know what you’re doing. Don’t be too bullish – Rome was not built in a day.
Cheers
Stu
Thanks for your input Stu
I am VERY careful with my money and borrowed money and have a AAA credit rating. To the best of my knowldege i have never missed a payment on anything.
I also understand that not everyone is as careful as myself hence why the banks are so conservative.
Even so im not ammune to making mistakes. And i guess in the investment property market there are also many varible external people one needs to rely on to meet ones obligations. This will be a new concept to me.
Regards Bear
I have my first investment property in the pipeline which I secured off the plan, I bought it with my brother through the Property Investing company I work for now… and I am in a commision base payments.
I guess I got through because I work there.What will be my chances of buying a +ve cash flow property? Will I need to apply for a Low Doc loan.
I planning to have my cousin as my partner… but his self employed as well. So will this make it very difficult to borrow??Hi Carlo
Congrates on your 1st property in the pipeline.
there are a few mortgage brokers on the forum that have been very helpful to me and im sure they will be with u also once they see ur post!
If u already have property (example your dwelling) u can borrow against that im sure with out too many probs on a low doc loan. Basically as long as you have some form of security is my understanding.
Regards Bear
Regards Bear
Carlo
With most low doc loans you will need 20% commission. Some require you to be self employed. many also have more restrictions such as sqeaky clean credit history, and there are location restrictions (no inner city or country).
Terryw
Discover Home Loans
North Sydney
[email protected]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
With most low doc loans you will need 20% commission.
I think Terry means 20% deposit[
]Cheers
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Bear,
To your original question about lies to the lender.
My fifteen years of Police experience tells me that you will commit the offence of ‘obtain money by deception’, under the Crimes Act. People do get charged with this crime very frequently and sometimes go to jail[!]The same most probably applies to those who do not inform their lender or LMI that they are wrapping.[
]Be very careful in taking advice from all the guru’s and brokers about wrap finance, you are the one who will end up in it, not them![
]regards
Tony[8]
Thank you to all with clearing up a few things with Low Doc loans.
How you must have a good credit history?
I guess that’s always the case. You must be able to pay off the loans without fuss.Hi Guys,
So what you’re saying is that if I am self-employed (Under 2yrs) and therefore need a lo-doc loan, I’m going to have trouble if I buy in a country area? Perhaps a higher interest rate or no finance at all?
Cheers,
Sue [
]Be careful not step on the flowers when you’re looking at the stars
Thanks Montrose i think that answers my question[
]Regards Bear
Hi Sue,
You will find that lenders have a set policy on “postcodes:. For example you may get say,90% LVR in one area and only 70% in another…usually slow moving Rural/Regional areas.
Your best bet is to purchase where the population is 10,000 +. Suggest you talk with Resi Home loans, Liberty, and Easy-loans.com.au
Cheers
Billfromoz
Hi Guys,So what you’re saying is that if I am self-employed (Under 2yrs) and therefore need a lo-doc loan, I’m going to have trouble if I buy in a country area? Perhaps a higher interest rate or no finance at all?
Cheers,
Sue [
]Be careful not step on the flowers when you’re looking at the stars
[/quote]Sue,
Talk to a broker…being self employed for under 2 years doesn’t necessarily mean a LODOC. I did a land loan for a guy self employed for one year on the strength of his BAS.
Lower interest rate too.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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