All Topics / Creative Investing / Wraps & Big 4 Banks

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  • Profile photo of McHenryMcHenry
    Member
    @mchenry
    Join Date: 2005
    Post Count: 45

    Has anyone successfully obtained finance via one of the big4 for the purpose of selling under a vendor finance agreement ?

    I am specifically interested in knowing if the CBA play ball.

    Thanks

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    CBA don’t like wraps at all, in my experience. I have a couple of smaller lenders that will do them though.

    Regards
    Alistair

    Profile photo of McHenryMcHenry
    Member
    @mchenry
    Join Date: 2005
    Post Count: 45

    What is the logic behind lenders disliking properties sold under wraps ?

    I read in a BLOG that brokers get deals through by simply not telling the lender that it is a wrap otherwise if would be declined, any truth to this ?

    I have an existing property financed by the CBA that I am potentially looking at selling under terms, in this scenario would I need to cancel the existing finance arrangement and then refinance or leave the existing arrangements and simply sell the property under terms ?

    At the end of the day what difference does it make to the lender and do they need to know ?

    Thanks

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    I gather they are scared of adverse publicity from people such as Neil Jenman. Mortgage insurers also don’t like them for some reason.

    You can certainly simply not tell the bank, but if they find out they will probably stop lending to you. They find out when you try to use your unusually large income per property to prove servicability. A broker is silly to put a ;oan for a wrap property through a lender that has a policy against them, it is a good way for them to lose their accreditation with that lender.

    I understand that some wrappers have success with NAB and I am lead to beleive that Adelaide Bank sometimes do them also. However, this is only certain lending managers. We use some smaller mortgage managers for our wrap clients, who don’t have a problem with the concept.

    Regards
    Alistair

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    If your read your loan documents, I think you may find that onselling the security property without the banks written permission is a break of the loan contract and this would enable them to ask you to repay the loan. I think CBA also request you let them know if you sell an option on a property.

    Terryw
    Discover Home Loans
    Parramatta
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    We completed over 80 wraps with NAB which was done at National level in Melbourne however in saying this they wanted our development business and was almost a condition of each loan.

    If you ask the average branch then they will say no and probably not even understand what you are taking about.

    The other wraps we have completed through one of the other majors who again don’t accept them unless their is other business involved.

    CBA certainly don’t take them.

    Cheers Richard
    Ph: 07 3720 1888
    [email protected]
    http://www.yourstatefinance.com

    Specialising in US & IP finance.

    Richard Taylor | Australia's leading private lender

    Profile photo of hellmanhellman
    Member
    @hellman
    Join Date: 2005
    Post Count: 109

    I would always use a broker when obtaining finance.

    At the end of the day the mortgage broker gets paid by getting you your loan while the bank manager simply gets a bonus. In my mind mortgage brokers fight harder to get the loan than staff do.

    As such I would use a mortgage broker (whom has many more lenders on their panel, where as a bank has only them on their panel). Also there are large scale funders that are just as good (alot of the time better) than the banks.

    Hellman

    Profile photo of DobbyDobby
    Member
    @dobby
    Join Date: 2005
    Post Count: 37

    What the banks don’t know won’t hurt them.

    Life is like a box of chocolates – you never know what you’re going to get!

    Profile photo of MrFairGoMrFairGo
    Member
    @mrfairgo
    Join Date: 1969
    Post Count: 93

    Real-life experience from November 2005:

    We just refinanced a property up to what the wrap purchaser owes us. The original loan was with another bank: the refinancer is CBA. They wanted to give us 80% but we said no, just what the purchaser owes us please (60% of valuation).

    CBA know it is wrapped. They even asked why there is a caveat on the property (showed up on their title search I guess) and immediately accepted our explanation that it is because the instalment purchaser was encouraged to put a caveat on for their own protection.

    Of course, the fact that we have 14 loans (all at 80% or less LVR) with CBA and we are dealing with Premium Banking might have something to do with it. They take an overall view of your portfolio and how you conduct it. :)

    We have been very pleased with CBA Premium Banking – the guys and gals are employed by the bank, but they really bend over backward to make things happen for the client.

    Cheers

    Lance

    .
    Fair Go Homes
    http://fairgohomes.com.au

    Rapt with Wrapping!
    1300 666 247
    [email protected]

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Lance

    Is you 60% loan 60% of the installment contract price.

    If so i wonder why your wrappee has not asked you to take a mortgage on the property as they are entitled to do so in Qld under the 1/3 rule.

    Cheers Richard
    Ph: 07 3720 1888
    [email protected]
    http://www.yourstatefinance.com

    Specialising in US & IP finance.

    Richard Taylor | Australia's leading private lender

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