All Topics / Finance / Bank serviceability.

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  • Profile photo of LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13

    Hi guys,

    Are all banks now assessing servicing around the 7.50 per cent? Do they provide flexibility if your fixing in your loan say for 3 or 5 years? Speaking to my lender they said no. Also it’s ridiculous to think all investment loans are assessed at principal and interest and not on interest only if that is your long term strategy. I can understand home loans but investment loans? Looking forward to what we people think.

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

    Hi Loui

    Don’t blame your Bank as they are directed by APRA and that is just one of many changes coming in over the next 6 months.

    In saying that NO not ever lender still services external debts applying a sensitized rate.

    Certainly getting harder to grow your portfolio but done properly can still be achieved.

    Cheers

    Yours in Finance

    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 LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13

    Hi Richard.

    Your absolutely right. Are you saying other banks are doing things differently with the rates they assess loans? Have your got examples? Also are they main stream lenders?

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

    Hi Loui

    With the odd exception all main stream lenders have already adopted the new servicing requirements applying a minimum benchmark rate.

    I am only aware of 1 banking lender that hasn’t changed its policy yet.

    Cheers

    Yours in Finance

    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 Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hi guys,
    Are all banks now assessing servicing around the 7.50 per cent? Do they provide flexibility if your fixing in your loan say for 3 or 5 years? Speaking to my lender they said no. Also it’s ridiculous to think all investment loans are assessed at principal and interest and not on interest only if that is your long term strategy. I can understand home loans but investment loans? Looking forward to what we people think.

    Hi Loui,

    Yes, most lenders assess servicing at 7.25%-7.5%. There are differences between the lenders as to how they assess existing (and new) loans so it’s worth checking with a few lenders (or, better yet, a broker).

    Yeah, the P&I assessment for INV is annoying but it does make sense. It’s a way to ‘stress test’ the borrower: if you can handle P&I and higher rate, you’re solid. As mentioned, not all lenders are the same but the idea is (APRA).

    Hope this helps? 👍😎

    Cheers,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Are all banks now assessing servicing around the 7.50 per cent? Do they provide flexibility if your fixing in your loan say for 3 or 5 years?

    No – there’s a few still with generous borrowing calcs. Not sure how long they’ll last for though.

    Just need to start looking outside of the mainstream.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13

    Thanks Jamie.

    I can only imagine if negative gearing was abolished how even tougher it will be to get loans approved without the tax breaks on available income to service.

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

    Hi Loui

    Believe it or not a few lenders already do not factor in negative gearing to their servicing calculations.

    Cheers

    Yours in Finance

    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 Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Lenders have always stress tested new debt being applied for – which is currently hovering between 6.5-8.5% stress tested rates between the lenders. The big kicker is with existing debt which has seen the dramatic shifts in borrowing capacity. Quite a few lenders would previously treat existing debt repayments at the actual amount paid, however with the government regulator applying pressure many are now testing it at the same level as new debt.

    There are still lenders however who just stress test it at a lesser degree than those lenders, and even some which still take existing debts at the actual amount.

    This is where an investment focused finance strategist can shine – as they have access to the broad range of products which will have these features, instead of being stuck with one lender with one set of policies and a handful of products.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13

    Gents awesome advice. Really appreciate it.

Viewing 10 posts - 1 through 10 (of 10 total)

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