All Topics / General Property / St George Bank no longer lending to hard working Aussie expats

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  • Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Nice one St George Bank….. :( just found out that they’ve changed the rules on your portfolio loans and that they are no longer offering ANY loans to Australian expats working overseas so even though we’ve paid down our mortgage over $A110,000 over the last 12 months they will not allow us to purchase an additional investment property.

    Oh and because we’ve locked in some of our loans until 2020….cant release the equity in order to refinance anywhere else either.

    I’ve always heard about Australian banks being assholes when the going is tough……we’re doing great and paying down our mortgages every month like clockwork an additional 10k off the principal over and above regular payments only to find this bullshit about how ‘you’ve changed your mind but we’re locked in so cant go to the competition’.

    I’ll be making sure everyone is aware of what a raw deal St George is giving to Aussies expats working hard overseas so they dont get caught in the same situation as us.

    Bring on 2020 asap and we’ll be taking our business elsewhere.

    Ref #4233486

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Hi Dean

    Not quite correct.

    SGB have limited the lvr to 70% on a purchase and a few currency restrictions but still doable as an expat.

    Downside is you cannot access equity so your portfolio loan becomes restrictive.

    Don’t worry they are not alone.

    Just another interesting week in lending.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
    Join Date: 2015
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    Hi Dean
    Not quite correct.
    SGB have limited the lvr to 70% on a purchase and a few currency restrictions but still doable as an expat.

    Hi Richard, we know about the 70%LVR for expats, this has always been the case and isn’t the issue here (we are currently 54%LVR and more or less neutrally geared) the issue as I’ve been told is NO FURTHER PORTFOLIO LOANS for expats.

    Exact quote
    “I’ve also received confirmation we can no longer offer the portfolio line of Credit to non-residents. Even if I could give you the level of funding you need, I would have to do so under a standard 30 year loan contract.”

    I’ve been told “its being sent upstairs for review” but like you said my main concern is if I cant access the equity from the last 12 months……what was the point of signing up and paying for St George Portfolio Loan over the past 4 years :(

    All in all its a very first world problem, and we don’t have any issues in refinancing through another bank/lender, just a PITA especially as we cant move all of our loans over to another bank however as soon as August 2020 rolls around i’ll be writing a nice fat check to St George and saying see ya.

    Lol the irony is we just refinanced our primary residence here in New York and could have easily drawn down up to $1m in equity here and used it for our next Sydney investment property no problems (and that’s still an option but not sure I can get 3.5% 30 year fixed as rates have moved since Yellen started jaw boning a few months ago).

    • This reply was modified 7 years, 9 months ago by Profile photo of DeanCollins DeanCollins.
    Profile photo of TerrywTerryw
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    @terryw
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    Can u not just change products?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    I can if I want to pay a break fee on the fixed loans……

    The whole point of the Portfolio Loans was to get the advantage of the equity from each property when purchasing the next.

    Luckily we have one property variable with $200k available so depending on what happens on Monday we’ll basically start shopping in a week or so for another bank and just use that $200k as “the deposit”.

    The irony is that we are practically neutrally geared and the next property would have cost us $5-10k pa……as we managed to pay down $A110k in the last 12 months…..I think the risk to the bank is negligible.

    What is at risk is that in August 2020 when our last property comes off “fixed” that we walk the entire portfolio off to someone else quick smart.

    Profile photo of TerrywTerryw
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    @terryw
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    Any possibility of uncrossing the loans?

    Perhaps part may be able to be broken out and refinanced – incurring a break cost if need be. These costs may be deductible and may result in lower ongoing interest as well.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Not without a break fee and I’d rather chew nails first :)

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Hi Dean
    Downside is you cannot access equity so your portfolio loan becomes restrictive.

    Yep Richard, that was the whole point of signing up with the Portfolio Loan platform in the first place eg to be able to be able to get the equity recognized and borrow more.

    The current plan is to secure through a different lender – 5 year fixed I/O <70%LVR – as a separate standalone loan, the annoying part is will tie up any equity in that property for “5 years” even if we have a change of position due to APRA loosening weightings sometime in the future when we come to borrow for the next property in 12 months from now.

    lol time to switch to NYSE/Nasdaq equities for our $10k free cash flow after expenses each month I think?

    Profile photo of D.T.D.T.
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    @dtraeger
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    Shouldn’t have cross collateralized

    D.T. | DT Property Management
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    Adelaide Property Management - whole Adelaide metro

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Yes DT but accessing the equity was more important to me, the whole reason why the Portfolio Loan idea works (lol when it works) is that each time you can automatically use the equity from the previous 12 months and buy another property.

    So basically your advice is….take out a standalone loan with a vendor that is fixed for the next 5 years…..great but the problem is that I cant use that equity to purchase another property unless I refinance it, that’s plain inefficient and your money ends up siloed between various lenders at low LVR being lazy money.

    The problem here is how St George have decided to mange their loans….not the original idea etc. Portfolio loans will always make your money work harder for you.

    Profile photo of TerrywTerryw
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    @terryw
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    You can still access equity by borrowing against a property that already is secured by a mortgage for a fixed loan.

    e.g.

    $400,000 loan on a $500,000. Fixed for 5 years.
    Property increases to $600,000 you can keep the $400,000 fixed and take out a new split of $80,000.
    The $400k loan would be have IO fixed and the $80k loan could have been portfolio.

    I think the problem you are in is due to how you structured your loan.

    Were you advised to set up like this by the Margaret Lomas group?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Hi Terry,

    Sure….but when the bank that secures your $400,000 loan says….sorry but we aren’t lending you any more money on a property that they already have a mortgage on….? then what?

    eg you are in the same situation as I am for the St George Portfolio loan…..

    Surely you aren’t suggesting a secondary mortgage right? eg a bank to take the second mortgage on the additional equity? I didn’t think that they even had those in Australia.

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Keep in mind I could understand that if you had a variable loan….you could just pay it out and walk away to another bank and secure the additional equity increase, but for my purposes I feel more comfortable structuring debt over a longer term, particularly in Australia where the banks are fat and happy and secure really wide spreads.

    The spread is much lower here in the USA (read competition is higher) eg today usa govt T-bills are only around 1-1.4%% lower than my 30 year fixed.

    Profile photo of TerrywTerryw
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    @terryw
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    Hi Terry,
    Sure….but when the bank that secures your $400,000 loan says….sorry but we aren’t lending you any more money on a property that they already have a mortgage on….? then what?
    eg you are in the same situation as I am for the St George Portfolio loan…..
    Surely you aren’t suggesting a secondary mortgage right? eg a bank to take the second mortgage on the additional equity? I didn’t think that they even had those in Australia.

    In that case you have 2 options:
    1. stay put, or
    2. take your $400k loan and refinance with a lender that will lend.

    When cross collateralised you won’t have the second option.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Actually there is a 3rd option.

    3. Got to another lender that will take a mortgage behind an existing mortgage – St G are good at this, but you are already mortgaged to them, another option is ANZ possibly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Hi Terry,Sure….but when the bank that secures your $400,000 loan says….sorry but we aren’t lending you any more money on a property that they already have a mortgage on….? then what?eg you are in the same situation as I am for the St George Portfolio loan…..Surely you aren’t suggesting a secondary mortgage right? eg a bank to take the second mortgage on the additional equity? I didn’t think that they even had those in Australia.

    In that case you have 2 options:1. stay put, or2. take your $400k loan and refinance with a lender that will lend.
    When cross collateralised you won’t have the second option.

    Cool, thanks for the clarification, I appreciate you have way more experience in the space than my wife and I do so appreciate the clarification.

    I can if I want refinance all of the properties (eg example 2) but would involve paying a break fee for the fixed loans…..and would prefer not to do that.

    Our plan is to leave them in place, draw down the variable loan for 30% and then seek a <70%LVR IO 5 year fixed loan from someone else for the difference on the next property. The irony is we are only going to go from about -5k negatively geared to about -12k which is well within our ability to service so apart from St George missing out on profit they are still on the hook for as much risk as before…..

    Profile photo of Corey BattCorey Batt
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    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Hi Terry,Sure….but when the bank that secures your $400,000 loan says….sorry but we aren’t lending you any more money on a property that they already have a mortgage on….? then what?eg you are in the same situation as I am for the St George Portfolio loan…..Surely you aren’t suggesting a secondary mortgage right? eg a bank to take the second mortgage on the additional equity? I didn’t think that they even had those in Australia.

    In that case you have 2 options:1. stay put, or2. take your $400k loan and refinance with a lender that will lend.When cross collateralised you won’t have the second option.

    Cool, thanks for the clarification, I appreciate you have way more experience in the space than my wife and I do so appreciate the clarification.
    I can if I want refinance all of the properties (eg example 2) but would involve paying a break fee for the fixed loans…..and would prefer not to do that.
    Our plan is to leave them in place, draw down the variable loan for 30% and then seek a <70%LVR IO 5 year fixed loan from someone else for the difference on the next property. The irony is we are only going to go from about -5k negatively geared to about -12k which is well within our ability to service so apart from St George missing out on profit they are still on the hook for as much risk as before…..

    And without x-coll you wouldn’t have triggered the break fee, as you would only refi the variable loans. ;)

    That’s the big issue with cross collateralisation, it’s not a problem until it is. Then you sit there wondering why you gave up so much fleixibility for nothing.

    Corey Batt | Precision Funding
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    And without x-coll you wouldn’t have triggered the break fee, as you would only refi the variable loans. ;)
    That’s the big issue with cross collateralisation, it’s not a problem until it is. Then you sit there wondering why you gave up so much fleixibility for nothing.

    No the break fee is only for the fixed loans, I’ve got one fixed until Dec 2017 and one until Aug 2020.

    I could move the variable but would need to keep the overall portfolio to less than 70% eg if I move out one of the properties I then have to reduce the overall portfolio limit by a corresponding amount.

    That’s why I was asking terry about even if these were separate loans how do you recognize “increased equity” on a fixed loan.

    Unfortunately even though we are under 70% LVR I just don’t feel comfortable with variable, which would make the most sense, eg you could move any time for minimal costs and legals.

    However I prefer 5 year fixed and think its worth the premium to set it that way so I can sleep at night and know exactly how much my payments will be for the next 5 years (well 5 – X payments etc).

    Same reason I signed up for 30 years for our PPOR here in NYC. Yes im paying 0.75% more for that loan attribute but when you add up over 30 years the difference……awesome insurance.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
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    I could move the variable but would need to keep the overall portfolio to less than 70% eg if I move out one of the properties I then have to reduce the overall portfolio limit by a corresponding amount.

    If they were stand alone you would not have had this problem.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
    Join Date: 2015
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    We’ll just have to agree to disagree that this is/isn’t a problem. :)

    I do however have a “right now” particular problem with St George because they’ve cut off expats to the Portfolio Loan product so will need to find a new lender to borrow a <70%LVR IP IO 5 year fixed of around $490,000 (the other $210k coming from cash/variable LOC), that are open to expats with US PAYG income so we’ll see what happens.

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