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How to get independet loans

Discussion in 'General Investing Discussion' started by jose, 4th Jan, 2010.

  1. jose

    jose New Member

    Joined:
    21st Dec, 2007
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    3
    Location:
    melbourne
    Hi Everyone! I have 3 loans ( PPOR plus 2 IIO) with one bank. one as collateral for the other and so on. My banker told me they can not longer loan any more.
    ?how can I get independent loan, PPOP and I/loan have over $100k in equity:(
     
  2. Billv

    Billv Getting there

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    15th Jul, 2007
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    1,796
    Location:
    Sydney, NSW
    It could be because of serviceability reasons and not because you've run out of equity.
    Some lenders are more generous than other so you could try someone else.
    Which lender are you with?
    Are you locked in with your current lender?
    When did you get your loan and do you have any portion fixed?
     
  3. jose

    jose New Member

    Joined:
    21st Dec, 2007
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    Location:
    melbourne
    thanks Bill,I am with Westpac, all fixed for 3 years so far. finishing very soon. Serviceability could be according to them, but if that is the case, how come many investors owe millions and still come ahead. If that is really the problem no body will be investing ,do you think so? what do you suggest according to your experince, as you can see I am still pretty new in this. Thanks again Bill
     
  4. Billv

    Billv Getting there

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    Location:
    Sydney, NSW
    Other people could have bought properties which have better cashflow than yours (outside Melb or in regional areas) or bought them a few years ago before prices had increased or there could be other reasons.

    You could try another lender and see what they think of your situation
    but remember that lenders are often VERY conservative.

    I am a firm believer that the only way to get ahead in life is by being proactive and taking some risks.
    Often you can reduce some of the risks by having a cash buffer, taking landlords insurance, having income protection insurance etc.

    Talk to a couple of lenders to get an idea of your serviceability and if you get stuck I can put you on to a mortgage broker or 2 who can help you structure your loans better and borrow more.

    Some people bite more than they can chew and when interest rates go up or their situation changes, lost their job, got sick, wife got pregnant they can't manage, so if you are going to take this path you need to know what you want, have a plan on how to get there and an exit plan in case it all goes horribly wrong and you lose everything....
     
  5. DavidJ

    DavidJ Member

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    28th Jun, 2006
    Posts:
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    Location:
    Sunshine Coast, Queensland
    Hi Jose
    Early on in our investing we ran into similar 'serviceability' issues with the major banks. I was very confident that we were in a position to manage more borrowings and did some cashflows to show how we could manage it. We found a good broker who found a lender that could see that we were not over-stretching ourselves and we managed to buy a few additional properties that way. That was a few years ago and things are a lot tighter now with lenders but a good mortgage broker should be able to help you with some options especially if you have a good deposit and some cash buffer to cover any shortfalls.
     
  6. GregR

    GregR Reid Consultants

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    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Jose,
    Westpac generally has reasonable serviceability levels but you may have just run into a case where you have reached your overall limit with them. All too often a lender will place a cap on the total borrowing and irrespective whether you can service or not, they just stop lending to you. This cap is sometimes set at $1m.

    I have a number of clients come to me who have reached that cap with a number of different lenders, they did know until they went back for more funds. Some had been direct through the branch channel, others had been placed via a mortgage broker.

    I rarely would use the same lender twice for a multiple property investor because of these and other problems of cross-security etc. I suggest you review your property portfolio then work to disengage a property from Westpac to another lender, free up some security and get a pre-approval from a third lender if you are looking at going again with another IP. Depending on when you took the fixed rate, the break costs may be zero.

    If you need some help, let me know or find a broker who specialises in helping multiple property investors.
    Good luck
    Greg
     
  7. jose

    jose New Member

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    21st Dec, 2007
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    Location:
    melbourne
    Very interesting! Yes I did reach the 1m limit and passed it a bit. Guys, thank you so much for the information and time. I better start shopping around. keep you in mind. Thanks again.
    :) Jose
     
  8. jason626

    jason626 Member

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    16th Jan, 2009
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    Location:
    moe(melbourne),vic
    i was talking to a morgague broker and we found that westpac was one of the worst at lending money with especaially in recent times, while the best were anz and the commonwealth.
     
  9. GregR

    GregR Reid Consultants

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    13th Jul, 2009
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    Location:
    Berwick Vic
    Jason,
    I am not a big fan of Westpac mainly because of the branch network interaction with brokers (or lack of) and the difficulties they cause. I have used Westpac a number of times because the clients choose that lender and shook my head each time.
    However they are lending money although their interest rate increases above RBA cash rate indicates their appetite has reduced as to building market share.

    My earlier comment was relating to their servicing calculator which is one of the better ones for higher borrowing limits depending on your specific income mix and liabilities. It can favour multiple property investors compared to some other lenders.
    Greg