mortgage brokers option?

Hi,
My husband and I are on professional/break-free package with ANZ at the moment - the package allows us to buy up to 5 properties without any application/admin fees. Our bank manager used to be super duper fast and efficient. We used to have to just email her to refinance, she'll do all the numbers, send us pre-approval within a few days, we put an offer in, sign the docs, and financing transaction completed in a couple of weeks!

Now, it's a different story. Not sure if it's because banks don't want to lend for IPs in general anymore, or because we are now working overseas (relocated to Singapore 6 months ago), things are too slow and too difficult.

Our situation and hurdles:

• We have 3 properties in Sydney; 1 two bedroom unit, 2 houses with 2 granny flat each. All rented and with positive cash flow. (Not sure if ANZ counts all those as 5 properties in total under our professional package, hence making it harder for us now?)
  
• We want to refinance our latest IP house + granny flat, to purchase an IP in Brisbane now. Latest bank valuation $800k - current mortgage $483k. Refinance at preferably 80% LVR. (ANZ said they have to get the head office approval for 80% LVR, or we'll be stuck with just 70% LVR for this dual occ.)
  
• ANZ says (after 2 months to-ing and fro-ing) they could pre-approve only $500k. We need around $700k. (ANZ also said they still take overseas salary and charge Australian tax rate on it, which is rubbish coz in Singapore (where we're both working now), tax is peanuts at 2 to 3% a year only vs. Aus tax rates!)

Our questions:

1. We want a mortgage broker to deal with our bank or new banks to get the required funding please. Is there a mortgage broker who's happy to deal with overseas clients via prompt emails or call via Viber, etc?
2. Do mortgage brokers work across two different states; we want to refinance Sydney IP to get the deposit for Brisbane IP?

If anyone can recommend any savvy broker, it's greatly appreciated. Feel free to PM me please.
Thanks heaps!
Jsoe000

 

There are multiple skilled brokers here. You should PM one of them/us..

 

ANZ is a very conservative lender when it comes to servicing so factor this in.

Also once you go overseas I assume that you will do your taxes in Singapore and not in Oz. If thats the case then your servicing is further impacted as you will lose your negative gearing benefits so you need to factor this in the servicing calculation.

Most lenders offer what ANZ is offering in their professional package. What they don't tell you is that they charge $10 per offset after the first one whereas say Westpac and CBA have unlimited offsets so not all professional packages are the same.

Also a lot of lenders may limit your LVR and consider you part of their non resident lending and this carries completely different rules and policies so again you need to factor this in and plan for it.

I recommend pulling out the equity against your existing properties. Do it via a term loan and do not contaminate the tax deductibility of the loans (existing loans vs the equity release loans).

The good news is that you are currently using a very conservative servicing lender so you will be pleasantly surprised once you see what the other lenders will lend you.

 

Hi Elite, Thanks for this.
We did our 2015 tax in Aus. We are working here for 24 months only and then back to Aus - we're Australians with work visas in Singapore. So within this 2 years, if we want to buy an IP in Brissie, lenders consider as non-residents? Are these policies pretty tight? e.g. 60% LVR max or something?

I like our term loan idea. Do you help with extracting equity from the ANZ existing mortgage? Or shall we tidy that up first ourselves, and then go to a mortgage broker with a clean slate (deposits + savings for a pre-approval from a different lender)?

Trying to weigh up whether we get into the property game again when we get back in 2017. But we don't want to wait 2 years to buy another IP.

 

Different lenders have different rules when it comes to non resident lending. For example, if you are an aussie citizen living and work overseas then NAB will treat you under their non resident policy and thus max LVR is 80% whereas CBA will go up to 95% LVR.

Either a broker or ANZ can assist with the equity releases. I would take a step back though and assess what you plan to do in the future and then determine which lenders to use at what stage of your portfolio.

There is no reason why you can't purchase property now just because you are living and working in Singapore. Its just important to use the "right" lenders.

Re servicing a lot of lenders will take different percentages of your income. For example St George will convert your income and take 80% of the income for servicing, Homeloans will convert your income and take 90% of the income and NAB will convert your income and take 100% of the income.

 

You realise that you're still probably a resident for tax purposes and still need to pay Australian income tax, right?

 

Yes Shorty. We understand that and our accountant worked out the right portion for us. But there's no double taxing between Aus and Singapore.

 

But there is tax in Australia with a credit for singaporean tax paid.

 

We'll see how we go next year. this year's tax is sorted. See what the accountant says.
Are you saying there's tax on overseas salary with Aus tax rate (minus Singapore tax portion) if we want to buy properties in Aus while working overseas?

 

Australian residents are taxed on their worldwide income, but they may be given a credit for tax paid in other jurisdictions.

But there will be a point when you are not considered an Australian resident for tax purposes anymore.

 

Thanks for this, Terry. Then ANZ is right to apply Aus tax rates on our income I guess. Definitely time to explore more lenders.

 

Hi Terry, getting slightly side-tracked here. How about Medicare levy and surcharges? Do we still have to cough up for those not used while we're overseas? Does that mean we get other benefits such as child allowances and baby bonus, etc. as Aus residents working overseas?

 

If you are a tax resident then all the usual will apply.

 

I am based in SG as well, and have a few brokers I work here with to finance AU property, happy to share, send me a PM

 

Thanks for the info, Rolf. Wow, so they take only 80% of our income, and then tax OZ rate on it. No wonder our pre-approval amount was so low. That's like double whammy!

Hi Michael, I'll PM you. Thanks.

 

For this reason, ANZ really isn't the ideal lender for overseas purchases. They're a conservative lender for investors to start with, throw in the income restrictions and it only gets worse.

Quite a few lenders are a lot more reasonable in their assessments if you can keep the LVR at 80%. It's possible that they'll use your net overseas income and won't penalise you on the currency conversion (although it is a good idea to factor this in somewhere).

One thing I haven noticed with expats is their servicing is improving quite a bit this past year, simply because the weaker AUD is working very much in their favour. Take advantage of this whilst you can!