Browse Forums Home Finance 1 Feb 14, 2011 6:27 pm Hi Only new to the forum, did a quick search but could find no other topic about it. I recently had a run in with the new lending criteria that has come into place recently. To cut a long story short Im over 40 single parent have owned property before. And had significant savings. Late last year found a block of dirt that suited my criteria so I purchased it. Have now settled on a design and builder and went to get a loan. This is when thing got a little hairy. Was informed that due to changes in lending criteria I may not be eligible for the amount I require. Reason 1. Dependants now restrict maximum amount lent to a greater percentage than before. Luckily my dependant finished school at the end last year. And is reasonably financially secure. So I was able to indicate that I didnt have a dependant. Reason 2. Age is now taken into account in lending criteria. As stated previously I am over 40. I was politely informed that I could only take out a loan for a period up to my retirement age. This required two things. Either I reduced the amount that I wanted to borrow by reducing finishing cost of property. Or I would be required to come up with the difference in the form of adding to my present capital as a deposit. I chose the latter as there had been already significant negotiation to get the price for what I required for the property already. However this has impacted on my safety net and also a few other inclusion I wanted after the property was finished. My real concern is I was hoping to use the property equity to acquire an investment property in the near future. After completion my LVR will be approximately 70%. At the moment I am a bit concerned on how this will impact on others. Being both people with one dependant or more. And those over the age of 35. Thanks Look forward to your thoughts on the matter. Re: New Lending laws excluding or limiting access to finance 2Feb 14, 2011 7:06 pm Hi, The law your taking about is NCCP. In regards to age and lending etc...it's up to the lender to decide what their "internal" underwriting guildlines are....it sounds like you got a really harsh lender! Who is it by the way? I never found age to be of a concern. The only time was when i had to lend to a 71 year old lady who wanted to downsize ( new place was more expensive )- still possible; just slightly tricker. End of the day if your having trobule with your lender or your dont feel 100% secure - get a quote to change, and have a backup- last thing you want is for the finance to be rejected at the last minute. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 3Feb 14, 2011 7:29 pm Hi thanks for replying. The lender in question is a credit union. I have banked with this institution for the last 14 years. They have never really let me down until now. I was not aware that its an internal thing. I thought it was as standard across the board. Thanks for that bit of info. I have been approved for the amount I asked for. Its just going to take a few items like new furnishings I wanted to purchase after completion off my shopping list. Due to the extra deposit I had to include. I think they are a bit spooked by the whole new legislation. Maybe in time they might change. In light of this I have decided to apply to a few other financial institutions. Just to see what they say and see if i can get a better deal. My only other real concern with it was being able to invest later on in the future. Re: New Lending laws excluding or limiting access to finance 4Feb 14, 2011 7:48 pm Understandable. NCCP has only kicked in recently, so a lot of banks espically the smaller one's are playing the "safe" hands till they know where the limits are- so hopefully over time they can relax and improve their position for the customers benefit. Good luck with the shopping of "new lenders" Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 5Feb 15, 2011 8:22 pm Ok day two and its not looking good. Maybe its my aversion to try and stay clear of the big banks. Not sure how this will pan out with the federal government wanting to encourage competition in the market. But it seems the smaller institutions are spooked by this new legislation. Spoke to four today. So it seems that my carefully planned budget is in tatters at the moment. And time is not on my side. Re: New Lending laws excluding or limiting access to finance 6Feb 15, 2011 8:33 pm THEGY Ok day two and its not looking good. Maybe its my aversion to try and stay clear of the big banks. Not sure how this will pan out with the federal government wanting to encourage competition in the market. But it seems the smaller institutions are spooked by this new legislation. Spoke to four today. So it seems that my carefully planned budget is in tatters at the moment. And time is not on my side. Buddy, your best advice you will get today is to "speak to a mortgage broker" ; im not trying to market my service here but , speak to ANY respectable mortgage broker!- there are plenty on this forum... For you to speak to the bank directly 1. Waste your time - as you dont know who and WHAT you should be asking.. 2. The more "official" enquires you make the more your credit file activity will have= Hardier to finance as bank will ask question " WHY did THEY not lend to you?? was there something we missed..?" 3. 80% of Brokers are free - so why not? 4. The rate you get and deal is either the same or better with a broker....never worst off. 5. Time is something us broker HAVE Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 7Feb 15, 2011 8:37 pm By the way ....how old are you??? when you say over 40- im thinking 45? 50? and i dont see ANY problem! and not sure why your having problem with ANY bank. Unless your over 60?? ( then yes you will have limited choose, around 5-7 lenders) Pm me if you dont want to disclose your age --- but sharing is caring Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 8Feb 18, 2011 4:32 pm OK believe it or not there is light at the end of the tunnel. After doing alot of reading and discussion. I have managed to get a bit of an revaluation. Which isnt perfect but is now alot better. It came down to the fact that I have banked with this institution for along time. And that my superannuation is in top order. I was able to give them an exit strategy as they call it. Basically meaning that I would not have to rely on selling my PPOR to furnish the remainder of the debt. As now my loan terms are past my retirement age. Another point of order that was to be considered. Was the valuation. Banks obviously will look to sell your property quickly if any unfortunate circumstance happens. If there are no other means to furnish the remainder of the mortgage. So if there valuation is less than your cost. You have to make up the difference. This can be a matter of contention as you being the purchaser/seller have your heart set on an idea of value. However the bank being practical will not value it in the same way. Sometimes you have to step away and look at things the same way. A lesson learned for me. With a moderate happy ending. Thanks shape for all your help. Much appreciated. Re: New Lending laws excluding or limiting access to finance 9Feb 18, 2011 4:49 pm No problem THEGY! - it was good having that chat you. If you have anymore problem - you have my number. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 10Mar 07, 2011 3:22 pm The above poster- Amy001- is a spam please dont click the links- and can mod delete. Regards Micahel Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 11Mar 10, 2011 8:42 am Yes all lenders now have policies requiring you to pay off your loan prior to retirement. The good news is that the specific details of their "retirement age rule" vary between lenders and are open to interpretation. One lender has a retirement age of 75 (except for manual labourers) and so if you reduced the loan term to 25 yrs this would not be a problem. Note that you could still have an interest only period if you liked so this is a pretty simple work around. In addition to this if you have plenty in superannuation or will owe less than 30% of the property value at the time of retirement then some other lenders can consider allowing you to downsize or make a lump sum repayment at retirement. New Lending laws excluding or limiting access to finance 12Apr 07, 2011 10:40 pm We may be victims of these changes. Late last year we had an approved loan (doing a knockdown rebuild) and was just waiting for the house contract. There were delays (we are talking about a builder after all) bringing us into 2011 before contract signing. The bank has made us reapply and now are saying that they will only lend us 80% of the construction loan rather than 80% of the expected value of the house on the land once completed. Ie we need to come up with the other 20%, the cash that we were saving for landscaping and driveway. Chatz Re: New Lending laws excluding or limiting access to finance 13Apr 12, 2011 7:02 pm jb_money Yes all lenders now have policies requiring you to pay off your loan prior to retirement. Well, that's very odd, since thanks to changes in legislation, there now is no compulsory retirement age for most jobs. It certainly used to be the case when I was a lender, back in the 80s - you could never approve a loan that would run beyond the borrower's 65th birthday then. It seems a very strange decision to effectively turn the clock back 30 years. My husband and I just got a 30-year loan from one of the big four banks without any problem at all ...and we're 50. The "interview" took all of 10 minutes and it was approved, no mention of any exit strategy and no qualms expressed about our encroaching senility. Older borrowers are usually a much better risk in most ways. Age is only one factor among many. Re: New Lending laws excluding or limiting access to finance 14Apr 12, 2011 10:50 pm We regularly have client who are 55+and the bank has no problem with a 30 years loan- especially if it's an IP. The bank still take in consideration your monthly super payment after retirement. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 15May 22, 2011 12:26 pm This is interesting and wasnt aware of the changes in legislation - what is the scenario if the valuation comes back less than what someone paid for the property. Do they inform the buyers or is this decision made on the basis of the buyers financial situation and outgoings. Eg, if the buyers has 40% of the deposit and is a doctor that gets paid well would they tell them of the valuation was less than what they paid for it or would they do an evaluation at all? Also, historically the valuations done by banks are up to 15% less than true market value, is this still the case. Obviously this is a scenario I am in. Cheers New Lending laws excluding or limiting access to finance 16May 22, 2011 1:10 pm You will always be told of a lower Val amount no matter what your profession. You just won't ever be given a copy of the Bank valuation - it is for staff's eyes only. If someone had 40% of the purchase cost then their options would be to either renegotiate the purchase price or alternatively absorb the difference and therefore borrow a slightly higher amount. Some things are worth waiting for. New Lending laws excluding or limiting access to finance 18May 22, 2011 10:56 pm Depends. They normally do a Residex type valuation first to see if it is in the normal sales amounts for the area. If it is dearer or if there was mortgage insurance involved then they will then normally do a full Val. Some things are worth waiting for. Re: New Lending laws excluding or limiting access to finance 19May 22, 2011 11:12 pm Hi, Just a few points. 1. As Kyton mentioned, it doesn't matter what your profession is, if a valuation is required; it will stil be done; One of the main benfits for Doctors is they will get an extra 0.1-0.2% Discount with some banks. 2. The valuation is for the bank staff eyes only, yes true... However a tip that the general public dont know about is, you can pay $50 to have this report AFTER settlement IF you desire. 3. Valuation is not required ALL the time, IF the deal is strong( good serviceability, good employment history, FULL docs loan) and the LVR is under 70% then the bank can waive the valuation and just use the sale price - the bank will try to find the CHEAPEST way to get the valuation, so if one is not required because the overall deal is low risk ...then they just wouldn't bother. CBA and NAB Can Wavie valuation where the LVR is under 60-70% and the overall deal is strong, sometimes it's just a matter of asking them before applying...with these 2 banks anyway. CItibank, ING, Suncorp, St George (sometimes), Bankwest - will order valuation NO matter what, even for 20 % LVR. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: New Lending laws excluding or limiting access to finance 20May 23, 2011 8:13 am Great thanks for your help, We are using the same bank and both have good credit history and dealing with the bank history. In fact using the same branch which probably doesnt matter when it goes back to head office. Thanks Again For reference, this is the Austlii reference. My take on this is, that they would be breaking the law denying access to a homeowner in Victoria, or their agent from having… 1 9098 you were just referred to get advice from your solicitor. This is a legal matter. Separately, why would you use a buyers agent for a house and land package? 3 57560 |