All Topics / Finance / Which bank?

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  • Profile photo of mum2fivemum2five
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    @mum2five
    Join Date: 2007
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    Just wondering which would be the best banking institution to approach for a 100% loan for investment property. Can one even get 100% loan for an investment property.
    Would rather not deal with wizard as I have had words with their valuer :p
    This is for a family member who wants to buy my investment property as an investment property for themselves and I don't trust the valuer they use to give an accurate valuation. The one liberty uses seems more accurate, but I don't know that they would be the best lender for this person or even if they do 100% loans
    Thanks

    Profile photo of v8ghiav8ghia
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    @v8ghia
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    Hi Linda. In short, none of the actual banks that's for sure.  While I am not personally a 'wizard fan' (comes after working with them….) they quite likely only use the same valuer as many other lenders in your area. What happens, is that most lenders have what they call a panel of valuers, and the proposed loan MUST be done via one of these. In the case of Wizard, the actual lender or branch principal can actually order the val themselves, so if they have a couple of valuers on their' panel' locally, they can request a different one. OTher lenders, have their 'head office' order the valuations, but do get kept in the loop however. While there are exceptions (for example Rams do a 100% IP lend if you have equity in another property) most lenders will do 95%. Of course, you can always 'change your mind' from it being an owner occupied loan @ 100% LVR to your Ip once it has been approved and settled (gasp, did I say that? No , must hve been someone else…..) So really, you may just have a valuer in your area that is a  bit of a strange one. As far as Liberty goes, if you were after an 80% loan, many of the so called mainstream lenders cannot compare with them at all, especially lo-doc, and I would not hesititate to use them for a loan like that. A 100% (or 95%) you are lmited to a degree, but if your family member has a clean credit rating someone like the two above mentioned lenders, or some of the less well known ones done via a capable ( mm) broker if you can find one you are comfortable with (not one that flogs their own loans under 'catchy' names where they get bigger commissions… but a 'true ' broker) should be able to help you. As far as 'investment' or PPOR, ' as long as the loan is paid on time the lender will be happy – although you can appreciate 100%LVR interest only is not seen as the norm, it would be P&I usually. All the best!

    Profile photo of Duncs75Duncs75
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    @duncs75
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    Hi, I can't recommend any individaul bank as I have not chased a full 100% lend on any of my 5 investment properties. But the best thing I can recommend is go through a mortgage broker as they will have a heap of different banks and institutions to choose from. Different brokers also can do different things as they sometimes deal with different banks and lenders so don't give up if the first broker you see can't do what you wan't. If no one will lend the full 100% the next option is a 95% loan with the LMI (lenders mortgage insurance) capitalized which will get you about a 97% lend most major banks will do this.

    Hope this helps.

    Duncan

    Profile photo of mum2fivemum2five
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    @mum2five
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    Thankyou both, my family member has a good credit record and great income, just no savings, he thought both our houses for sale were over 200k, it wasn't until today when I was talking about my Narrabri IP and that it was 148k did he even think about, he asked what the rent was and realised at $210 p/w that it is agood buy (specially since he's in the mining industry ). He said straight up, i'll buy it for 148k…… that way he can use the equity in a couple of years to buy a PPOR…wish i'd mentioned the price before…lol
    Anyway, if he were to say it was PPROR then change to IP after settlement, what would be the tax implications if any? He is seeing this as a good way to get his foot in the door to buying.
    Can anyone recommend a good MB in the hunter region, or one that easily services the hunter as he works long hours and is often out of the state on business.
    He is planning to do P & I and pay probably an extra $150 p/w on top of what he will receive in rent so close to $100 p/w more than he is required.

    Another question, as the house is currently tenanted with a 6 month lease, would he still be able to say it will be his PPOR once lease is up?

    Thanks again, and sorry to be such a pain!

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

    One of the other considerations with with 100% lending is that the securities accepted are post code restricted.

    Assuming the property is in Narrabri your broker will need to check whether the post code is acceptable to the mortgage insurer as well as the lender.

    If he is a family member then another altenative is to consider a carry back 2nd mortgage.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of mum2fivemum2five
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    @mum2five
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    Yes, true Richard, hopefully Rams will do 100% there, might give them a ring. Just checked with the valuer I trust and they are on rams panel

    Profile photo of mum2fivemum2five
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    @mum2five
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    Just visited rams site again, and they have their investment loans advertised as

    Maximum LVR100% – Investment Only

    Does anyone know what that means, because the normal home loan that is 100% doesn't say 100% owner occupier Only or anything. Am I correct in thinking they WILL lend 100% on investment property?

    Thanks

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Linda

    No Rams will do 100% loans but the LMI is expensive so make sure he has sufficient money to cover these extra costs.

    Remember it is a 100% loan less Bank costs and charges which include LMI.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of mum2fivemum2five
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    @mum2five
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    Thanks Richard, I will be paying his stamp duty as this what what I offered to other if full purchase price paid, how much would LMI be on 148,000?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Maybe $5-6K just cant remember with Prime these days.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of mum2fivemum2five
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    @mum2five
    Join Date: 2007
    Post Count: 69
    Profile photo of mum2fivemum2five
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    @mum2five
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    Post Count: 69

    Wasn't sure how serious he was, but he went and got a 5k loan for legals etc today! Hopefully that will cover most of the LMI !

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Mhh just make sure that Rams and Prime down have a problem with a borrowed deposit for costs.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of mum2fivemum2five
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    @mum2five
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    Yeah hope so, I guess technically he could live off the 5K for 1 month and save the deposit from his salry for the next month ;)

    Profile photo of emmajane06emmajane06
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    @emmajane06
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    Hi there,

    I have got a loan through RAMS at 100% of the purchase price for a PPOR however the current tenant has a lease for another 11.5 months and I will move in after that to do up the place and take residence for 6 months as I also got the First Home Owners grant so have to fulfil those requirements – move in within 12 months – live there for 6 months consecutively. At the moment the property is cashflow negative by about $20 a week but once I have moved in and used those 6 months to renovate it should easily be cash flow positive. The property is about 3 hours from where I live in Sydney so it'll mean commuting to work 3 days per week and working from home the other 2 and my partner will remain in Sydney in a rented property. My consultant at RAMS wasn't bothered about me receiving rental income for 11.5 months and the only way I could afford the property was with the FHOG so I had to get creative, has your family member thought about doing something like that? Only downfall is that he has to take residence for 6 months continuosly.

    Emma

    Profile photo of mum2fivemum2five
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    @mum2five
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    Hi Emma,
    He isn't elible for FHOG, his wife (my sister) would have been, but unfortunately he owned for about 2 month 16 years ago before he split with his ex.
    He doesn't want the investment loan as it is compulsary IO for first 5 years (no extra payments allowed) and he wants to pay an extra $150 p/w, so he will try for the one your getting and just tell them he will be living in it after the tenants lese expires, he won't have to fullfill that as he isn't using FHOG.

    How have you found RAMS?

    Thanks

    Profile photo of m.pulleym.pulley
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    @m.pulley
    Join Date: 2006
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    Hi Linda,
    I am with rams at the moment, We brought a block using one of their brokers and the only problem we had was the mortgage insurer took longer than anticipated. We have now applied for a construction loan using the same broker and RAMS and have had the same problem which has now been blamed on the end of the financial year. Originally (for the block) it was blamed on the length of time between finance pre approval and title release (about 15 months late) and the change in valuation.
    I can understand all of these problems but the one thing I do not understand is why I had to continually call the broker to find these things out?

    Have you thought of doing a wrap with your brother?

    Regards,
    Mark

    Profile photo of mum2fivemum2five
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    @mum2five
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    Hi Mark,
    No we wouldn't do a wrap with him as we would need at least 15-20% deposit to use the funds for what we want to do (our main reason for selling) Besides I have 2 other interested buyers that i'm holding off, one of which has offered $500 more than asking price, if he can't get finance then that's cool, I can always sell to one of the others.
    Linda

    Profile photo of emmajane06emmajane06
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    @emmajane06
    Join Date: 2007
    Post Count: 38

    Hi Linda,

    So far RAMS have been good but I've read some nightmare stories on here. Yeah he should just say he will be living in it when the current tenant moves out but they will look into this ie I had to get my boss to sign a letter saying it was possible for me to work from Regional NSW even though the ofice is in Sydney, so they could see that my income would continue in order to service the loan.

    Cheers,
    Emma

    Profile photo of mum2fivemum2five
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    @mum2five
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    Well he went and saw RAMS today, no go, they won't lend 100% in postcode 2390 but they will lend him up to 350K, what a bummer, but not to worry , at least now he knows how much he can borrow, just needs to find an area with a good investment that they will lend 100% for. I have someone else lined up anyway that was willing to pay 500 above my full asking price, so win win situation I guesse.
    Thanks again

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