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

    Hi all,

    I have just had an offer approved for my first IP and pre-approval with RAMS was no problem.
    But after reading a few posts I am worried that I am going to be paying to much.
    Interest rate is 7.27% fixed for 3 years and I am doing IO but worried that I may have problems with borrowing for the next one in a few months.
    I have a reasonable income but only a few grand in savings, also have only been in my job since November.
    Can anyone recommend a good broker in Sydney?

    Cheers,
    Emma

    Profile photo of flashflash
    Member
    @flash
    Join Date: 2003
    Post Count: 140

    ring up Rams and ask them how much to pay out when refinancing,
    It will cost you I think around 2% for early payout.

    Can put a spanner in the works for future investing if you want to go to another financier.

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hey Emma – don't sweat. Unlike 'the banks' and some other lenders, Rams will only assess you for your next loan on your actual loan repayments on your current loans, whether elsewhere or with them. And if you do it in the first two years of your loan (the one you must have based on your description), you are only going to be assessed for servicability on I/O on 7.27% and & 7.37% respectively………beats what banks do!!!!
    AND a BIG congratualtions on making the purchase, and I wish you all the best with your next one….Go get em!!!

    Profile photo of redleavesredleaves
    Member
    @redleaves
    Join Date: 2006
    Post Count: 54
    v8ghia wrote:
    Hey Emma – don't sweat. Unlike 'the banks' and some other lenders, Rams will only assess you for your next loan on your actual loan repayments on your current loans, whether elsewhere or with them. And if you do it in the first two years of your loan (the one you must have based on your description), you are only going to be assessed for servicability on I/O on 7.27% and & 7.37% respectively………beats what banks do!!!!
    AND a BIG congratualtions on making the purchase, and I wish you all the best with your next one….Go get em!!!

    Hi v8ghia,
    Would you please explain how this works a little more? I am current a RAMS customer and this sounds positive, but I'm not sure I 'get' it totally.
    Thanks
    RL

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hi RL – No drama.  IT is not really a problem until you want to buy more than one or two properties, which of course most people looking at investing in property do. Please excuse me if I go over what you may already know in the following, but it may help others. The problem is in the 'servicability' of the loan, or your ability in the mind of the lender to meet the loan repayments. Essentially you are assessed on your income, which includes rental income (usually counted as 80% of actual rent recieved, although some banks (CBA) only assess it at 70%) less cost of living and other liabilities such as personal loans, card limits etc. What happens though, is with the amount of money you wish to borrow for the proeperty, the proposed loan is 'aassessed' at their current interest rate, plus a plug or loading of one to two percent (depending on lender) on top of that amount. IE. Interest rate is 8.07%, you are assessed as if the loan WOULD be 9.57%, and the repayment amouont is calculated as principal and interest, even if you are only paying interst only on the loan.
    So you can see, when you go into your bank for loan number two (and so on) lets say you have an interest only loan with them already for $200,000, at 7.47 % interest rate, paying interest only, they will count this in their assessment AS IF you were paying principal and interest on 9.57% !!!! You can appreciate, unless someone is buying property that the rent is significantly more than loan payments, you 'run out of borrowing power' quick smart. This is one of the reasons many people then approach another lender, or the serivces of a broker. It is a strange set up really, as the 'new' lender will either use your current repayments only with the other lender, or a 'formula' which is still less than what 'your' bank would have assessed you on.
    So……what I was referring to in my other post, is that Rams do not do this – as long as your loans are kept seperate (not shared security or cross secured) they see it as totally different, and when you approach them for your next loan, they only count the actuall repayments you are making (even if interest only) on your previous loan. A lot fairer on the client, and the reason why many property investors (and self employed as a sidepoint) choose a lender like this.
    Excuse the long winded explanation. But many likely are not aware of this, and I was caught out with the ANZ with this exact thing a while back – and they are inflexible. As many people feel a 'loyalty' to their bank, this is what often prevents them going elsewhere, and of course the bank won't suggest that you do….they simply say 'we're sorry, but you can't afford any more property, unless you earn more' and hold the door open for you on the way out.
    But as you alrready are with Rams this won't be an issue for you RL with any 'loading up' of your exisiting loan liabilities.
    All the best with your 'next one' redleaves – and if you need anything else clarrified, don't hesitate to ask.
     

    Profile photo of jezojezo
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    @jezo
    Join Date: 2004
    Post Count: 1

    Thank you v8ghia for that explanation as it has helped me to understand a little bit more about how the big banks continue to exert control.

    Profile photo of MooseheadMoosehead
    Member
    @moosehead
    Join Date: 2006
    Post Count: 42

    Good explanation v8ghia, cleared some things up for me.

    What do you think about the strategy of going to the 'strict' lenders first, then working your way down to lenders like Rams who are fairly lenient?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Moose

    Other way around.

    Rams are a securitised lender so therefore ever loan irrespective of the LVR is mortgage insured.

    You therefore have 2 levels of underwriting and with LMI tightening up policy across the board I can think of many other lenders I would approach first before i go to RAMS. 

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

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    No worries – Moosehead. it really comes down to what you want and what suits you at the present time, and remembering there is no such thing as the 'best loan' –  too many variables. If you have a 20% deposit or more, and perhaps looking for a PPOR and have a great relationship with 'your local bank', depending on the loan size, many find this the easy (and why not) and quickest solution, although looking around can often snare you a better rate or product with less or no application fees. Looking for an IP or chasing a loan with 5 or 10% deposit? Then that levels the playing field a bit, and often is the reason people look elsewhere, as the so called big 4 banks can often treat you like a leper at that point. Just remember, everytime you apply for a loan pre-approval it comes up on your credit file, which can make other lenders wary. There's better things to do than approach a heap of different lenders, and I would be inclined to do most of my research on the internet first, using each lenders website. Work out some of the loan features you do and don't want, and then see what c ouple of lenders can offer product wise (or special wise) and go from there, or if you don't have the time, this is where many choose to use a finance broker, which can be a good option, particularly if there may be some special circumstances or situation involved. You can no doubt appreciate someone that works for Westpac, CBA, Rams, ANZ, ING, Wizard, Bankwest etc etc will want to sell you their product – and if they don't they should be fired – the go is to make sure they treeat you with a bit of dignity and service, and give you a couple of loan options a some 'handy tips' along with it. If you are a bit unsure, or want to save time chasing, brokers 'in theory' help you choose from a range of lenders based on your requirments – and obviosuly will only suggest a lender on 'their' panel of lenders, hopefully giving you an option of the 2 or 3 most suitable choices to discuss the 'pros and cons' together. This is a free service, which you should not pay for.  What is it they say….pick a card, any card……..

    Profile photo of Mortgage HunterMortgage Hunter
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    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    Qlds007 wrote:
    Moose

    Other way around.

    Rams are a securitised lender so therefore ever loan irrespective of the LVR is mortgage insured.

    You therefore have 2 levels of underwriting and with LMI tightening up policy across the board I can think of many other lenders I would approach first before i go to RAMS. 

    I agree.  There are reasons not obvious why a true investor wouldn't go to a securitised lender like this.

    LMI on all loans (even if you don't pay a premium) caps your borrowing power much lower than mainstream lenders.

    We don't tell you this out of sour grapes either

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