Hi All,
What do most banks/lenders use as their interest rate when assessing a customers ability to repay a loan against other expenses? It’s been a while since I have noodled in this space, so I’m wanting to get an idea to see how much things have changed as APRA have changed the rules.
(For reference, the last time I enquired it was ~2% above their standard variable rate).
In the main 7.25% on both existing & new debt but there are a number of differences in the interpretation.
Odd second tier lender still working off actuals for existing debt but a dying breed.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard. This allows me to calculate a few things for myself.
Agree with Richard – generally around the 7% mark
Having said that – there are other factors involved when taking into account max borrowing for investors. Some lenders add back negative gearing, some take a higher percentage of rental income, some cap the yield….the list goes on.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
You mean it is not just the new loan application that they will use 7%…
Even the loans that were already approved at 4%, they will treat that as 7% as well?
Don’t forget most also factor in existing debts as PI over loan terms less the IO term.
so if you had a 5 year IO term on a 30 year loan and then next day go and get a new loan, the first loan will be assessed as if it is a 25 year PI loan – usually at 7%+And that is why it is so hard to buy multiple properties quickly these days.
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
As being alluded to above, there are quite a few things that have changed in the last couple of years & are constantly changing as we speak. Assessment rates for existing debt, new debt, OFI debt, living expense calculations, P&I/IO debt assessment differences, margin lending debt to name a few.
George Poullos | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeFinance Strategist & JP
You must be logged in to reply to this topic. If you don't have an account, you can register here.
