Forums / Getting Technical / Finance / Non APRA rating guidline lenders

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  • Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    Which lenders in Australia DO NOT have to follow APRA rating requirements (eg. don’t calculate your lvr based on 7.5%).

    We are in a situation where St George wouldn’t lend on our last property purchase (even though our negative gearing is only around $10k per annum and last year we paid down our loans at approx. $10k per month off the principal) – we ended up working with a great broker who was able to set us up at Westpac.

    The main reason for the difference is that our PPOR here in the USA is a 30 year fixed at 3.5% (27 years left) and yet Aussie banks are insisting that APRA rules require them to calculate that debt at 7.5% (eg a full 100% higher than it ever will be).

    So the question I have is are there other lenders that don’t need to follow the APRA guidelines eg does Peppers Group or Latrobe etc with their hard money loans fall outside of APRA guidelines?

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

    Yes both lenders you mention at present do not adhere to the APRA servicing guidelines.

    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 DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    Thanks Richard

    Why does APRA require the big 4 banks to calculate serviceability at 7.5% BUT Latrobe/Pepper Group/Liberty etc don’t need to follow these guidelines?

    TIA,
    Dean

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

    Because they are ADI’s that fall under APRA wing.

    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 DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    I checked these two links out

    http://www.rba.gov.au/fin-stability/fin-inst/main-types-of-financial-institutions.html
    http://www.apra.gov.au/ADI/Pages/Default.aspx

    is it just that “banks are govt insured” and “finance companies are not”? or is there something else that differs?

    eg
    “Finance companies raise funds using debentures and unsecured notes, from retail investors” and deposits sound pretty much the same apart from the Govt guarantee (which doesn’t really matter much if you are the borrower :)

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