Good Morning All,
I know many of you will be back at work this week. I know it will be nuts for all of you playing catch up!
The world of money last week saw the biggest news being a 2nd Tier lender, Better Choice Home Loans reducing their rates to 3.59% which might not seem great, it was a huge reduction from what it was, at 4.72%. They are an alternative funder and operate in a space a little like Pepper Money offering Alt Doc type loans and loans for those who might be credit impaired. The biggest difference with them is that they offer construction loans in this space which is unusual.
Virgin Money have been quite pro-active lately with a very interesting offer with ZERO lenders mortgage insurance when clients contribute between 15-20% of the property valuation. So essentially no LMI if the loan is at 85% or less. They also have an attractive $3,000 cash back with variable rates from 2.59% for under 60% Loan to Value Ratio Loans and 2 and 3 year fixed rates at 2.04% for under 90% LVR Loans.
I read an article in The Adviser this week with the headline ‘Loan process shrouded in mystery for FHB’s. They obviously haven’t read my book ‘First home buyers guide to the Galaxy’ 😉
One of the other major pieces of news this week was around APRA slashing the liquidity facility available to lenders for the second time in two months. The rules for lenders state and have firm figures in that they must hold enough high quality liquid assets like government bonds to survive periods of severe financial stress. The liquidity fund was originally established to assist banks with their liquidity requirements at a time when public debt levels were deemed too low for funders to meet the requirements. This I think shows that financially our banks are in a strong position, with APRA noting that the liquidity fund may no longer be needed in the future.
The week just past saw a referral from an accounting partner for a client that needed to buy machinery to fulfill a contract he had coming up. The asset wasn’t cheap around $290k. His bank had messed him around for weeks and had placed him with an inexperienced banker. He’d been a loyal client for many many years. I went to task understanding what the client needed and we looked at several solutions. The biggest issue came from him being a director of several entities, which in the current conservative lending environment meant that as full doc loan the funders wanted ALL the Tax Returns/Financials from EVERY entity. We couldn’t find a funder who was prepared to do a Lo Doc loan because of the cost of the machine. As soon as the clients bank knew there was a broker in the mix they changed their tone very quickly and approved the client. The client still wanted to deal with me because I had been proactive. However given the time it was going to take to get the financials from every entity, and that not all entities were with the one firm I suggested that he take up the offer from St George because they will ‘likely’ get it done in the time frame he requires, which was right now.
Sometimes I don’t get the deal, sometimes I can just stir the pot and still get the desired outcome for the client. We all know that people sometimes only discuss their finance needs when they have run out of options for themselves. A clients time is always better spent building and focusing on their business and not having to run the gauntlet of funders. This ended up being a good outcome for the client and I am confident that the next time he needs to borrow for whatever reason he will knock on my door first.
I hope you all have an amazing week. Don’t forget to reach out if you need anything.
JC
Scenarios and rates quoted are indications only and don't take into account your personal situation.
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