Interest Rate

Viewing 7 posts - 1 through 7 (of 7 total)

Schnake
Participant
@schnake
Join Date: 2014
Post Count: 11
July 22, 2018 - 8:12 pm
Hi All,
What do most banks/lenders use as their interest rate when assessing a customers ability to repay a loan against other expenses? It’s been a while since I have noodled in this space, so I’m wanting to get an idea to see how much things have changed as APRA have changed the rules.
(For reference, the last time I enquired it was ~2% above their standard variable rate).
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
July 22, 2018 - 8:29 pm
In the main 7.25% on both existing & new debt but there are a number of differences in the interpretation.
Odd second tier lender still working off actuals for existing debt but a dying breed.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Schnake
Participant
@schnake
Join Date: 2014
Post Count: 11
July 23, 2018 - 8:05 pm
Thanks Richard. This allows me to calculate a few things for myself.
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
July 24, 2018 - 2:07 pm
Agree with Richard – generally around the 7% mark
Having said that – there are other factors involved when taking into account max borrowing for investors. Some lenders add back negative gearing, some take a higher percentage of rental income, some cap the yield….the list goes on.
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]
Steven
Participant
@steven1982
Join Date: 2017
Post Count: 189
July 24, 2018 - 4:45 pm
You mean it is not just the new loan application that they will use 7%…
Even the loans that were already approved at 4%, they will treat that as 7% as well?
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
July 24, 2018 - 6:37 pm
Don’t forget most also factor in existing debts as PI over loan terms less the IO term.
so if you had a 5 year IO term on a 30 year loan and then next day go and get a new loan, the first loan will be assessed as if it is a 25 year PI loan – usually at 7%+
And that is why it is so hard to buy multiple properties quickly these days.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
George Poullos
Participant
@york-p
Join Date: 2015
Post Count: 10
July 31, 2018 - 6:49 pm
As being alluded to above, there are quite a few things that have changed in the last couple of years & are constantly changing as we speak. Assessment rates for existing debt, new debt, OFI debt, living expense calculations, P&I/IO debt assessment differences, margin lending debt to name a few.
George Poullos | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone Me
Finance Strategist & JP