29 September 2014

Further Reduced Residential Rates and Recent Deal Examples

In last month’s newsletter we announced the reduction of the standard borrower rates on all residential loans. Under our simple rate policy, our single borrower Prime and Lite DocTM rate has reduced from 6.99%p.a. to 6.50%p.a. This applies to 90% of our loans. What’s more we’ve moved our Full Doc Clear loan to a standing special at 5.60%p.a., down from 6.99%.

As a result, borrowers will almost always receive a rate of 6.50%p.a. for a loan application and if not that, then its likely to be 5.60%! Now that’s lending made easy.

In this week’s newsletter we take the opportunity to provide a handful of Deal Examples settled in recent weeks and currently available, together with a Residential product range overview, including our simple residential rate profile. Keep this ready as your reference guide for your next La Trobe Financial residential deals.

Residential Deal Examples

Refinance Full Doc with cash-out, 80% LVR – 5.60%
PAYG applicants were looking to refinance their existing mortgage of $380,000, secured against their owner-occupied property valued at $500,000 and to access additional equity to take an overseas holiday costing $20,000. Both applicants had an unpaid default on their credit file relating to an unpaid telephone and utility account. La Trobe Financial approved this straightforward loan at 80% under our CLEAR risk grade at 5.60%p.a.
Outcome – Loan approved at 80% LVR at 5.60% p.a.


SMSF Investment Full Doc, 80% LVR – 5.60%
Newly established SMSF structure. Borrowing entity seeking funds to purchase an existing investment property, balance of investment funds provided by SMSF. Property valued at $625,000 with a loan sought for $500,000. Rental income per the valuation was below the applicant’s expectation. Together with the sponsors’ compulsory employer contributions, these did not meet the servicing requirements of the loan. However the fund members had the capacity to make further personal contributions. Also, following purchase the SMSF would also have further assets of $120,000. Taking into account an investment return of 3.9% on this amount and further contributions available, the loan serviced. La Trobe Financial proceeded with the loan approval at 80% LVR under our CLEAR risk grade at 5.60% p.a. La Trobe Financial’s independent panel solicitors provided a complimentary Bare Trust deed. The property purchased and has subsequently been rented at levels well above valuation estimate.
Outcome – Loan approved at 80% LVR at 5.60% p.a.


Refinance Full Doc with Credit Impairments, 80% LVR – 6.50%
PAYG applicants were looking to refinance their existing residential mortgage of $420,000 and to consolidate $70,000 personal debts and $30,000 credit cards which had reached their maximum limit or were in arrears. Five months earlier the applicant’s mortgage had fallen 2 months in arrears (and remained in arrears) following one of the applicants being retrenched from their longstanding employment position; they have since been able to find another job with a new employer in the same field. La Trobe Financial treated the borrower’s financial situation as one life event, and taking into account their satisfactory history prior to this, La Trobe Financial approved the loan for $520,000 at an LVR of 80% at 6.50% p.a.
Outcome – Loan approved at 80% LVR at 6.50% p.a.


Self Employed cash out Lite DocTM (Low Doc), 80% LVR – 6.50%
The applicants had been operating their own business for 3 years and were looking to expand by modifying the business premises and purchasing new stock. The applicants’ owner-occupied home was valued at $600,000 and they had a mortgage outstanding for $220,000. They were seeking $100,000 to modify the premises and $150,000 for new stock. One of the applicants had 3 unpaid defaults totalling $10,000 on their credit report relating to debts accrued following time off work due to treatment of a serious illness 2 years prior. La Trobe Financial refinanced the existing mortgage of $220,000, cleared the $10,000 defaults and advanced $250,000 to the borrowers at settlement so they could have these funds readily available for their business. Serviceability was met with an Accountant’s Letter and Self Declaration.
Outcome – Loan approved at 80% LVR at 6.50% p.a.


Small Construction Lite DocTM (Low Doc), 75% LVR – 7.59% dropping to 6.50%
Self employed borrower required $420,000 to construct on land worth $350,000 in a town one hour from an Australian capital. A fixed price builder’s contract of $210,000 was in place. The borrower’s accountant had been unable to complete tax returns and the borrower also had a $2,300 default from a trade dispute in recent months which remained unpaid. La Trobe Financial approved a Lite DocTM construction loan for $420,000 at 75% LVR, with principal and interest repayments over 30 years. Serviceability was met with an Accountant’s Letter and Self Declaration. We did not require the trade dispute default to be repaid, following confirmation that the dispute was being contested. The borrower rate during construction was 7.59%p.a. dropping to 6.50%p.a. upon completion. There is no commission clawback on this or any La Trobe Financial loan.
Outcome – Loan approved at 75% LVR at 7.59%p.a. reducing to 6.50% p.a.


Residential Security Product Range

  RESI
FULL DOC
RESI
LITE DOC™
RESI
CASH OUT
RESI
SMSF
  5.60%^ 6.50%^ 6.50% 5.60 - 6.50%
LVR
(No LMI Applies)
80% 80% 80% 80%
(off the plan 70%)
Term 30 years 30 years 30 years 30 years
Interest Only *** 1-5 years 1-5 years 1-5 years 1-5 years
Purpose Any worthwile purpose Any worthwile purpose Cash out for any worthwhile purpose (unlimited) Purchase refinance of investment
Income Assessment 2 payslips
or financials
Accountant's
letter or Trading Statements
or BAS
Refer to Full Doc or LiteTM Doc 100% Rental Income. SMSF Contribution Statement.
Income deemed
at 3.9%
Max Loan Size $1M @ 80% LVR;
$1.5M @ 75% LVR;
up to $3M @ 65% LVR on application
$1M @ 80% LVR;
$1.5M @ 75% LVR;
up to $3M @ 65% LVR on application
$1M @ 80% LVR;
$1.5M @ 75% LVR;
up to $3M @ 65% LVR on application
$1M
App Fee 0.60 - 1.50% 1.25 - 1.75% 0.60 - 1.75% 0.60 - 1.50%
Credit Impair. Clear, 1 or 2 - life events with unlimited defaults/judgements
Location All locations considered
Commission 0.50% up front & up to 0.25% trail from day 1 (no clawback)
  AUTOMATIC ACCREDITATION THROUGH YOUR AGGREGATOR. ^ DEPENDS ON RISK GRADE OF BORROWER
*** INTEREST RATE LOADING OF 0.20% P.A. APPLIES
 
  RESI
CONSTRUCTION
RESI
RURAL ≤100 ACRES
P2C
PARENT to CHILD
 
  7.59%
BEFORE DROPDOWN
6.99% - 8.74% from 3.50%
SET BY PARENTS
 
LVR
(No LMI Applies)
75% 75%** Up to 105%  
Term 30 years 30 years 25 years  
Interest Only *** 1-5 years 1-5 years N/A  
Purpose Construction
(clients with credit impairment accepted)
Any worthwile purpose Purchase  
Income Assessment Refer to Full Doc or LiteTM Doc Refer to Full Doc or LiteTM Doc Refer to Full Doc or LiteTM Doc  
Max Loan Size $1M $1M up to $5M  
App Fee 1.25% 0.60 - 1.75% Refer to La Trobe Financial  
Credit Impair. Clear, 1 or 2 - life events with unlimited defaults/judgements  
Location All locations considered  
Commission 0.50% up front & up to 0.25% trail from day 1 (no clawback);
P2C: Refer to La Trobe Financial
 
  AUTOMATIC ACCREDITATION THROUGH YOUR AGGREGATOR. ** DEPENDS ON ACREAGE






... That's Lending

Best regards,
Cory Bannister, Vice President, Head of Distribution
La Trobe Financial Asset Management Limited



La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 123 staff and has managed over AUD$10Billion covering over 100,000 investment grade assets since inception in 1952.

Copyright 2014 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

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Ratings And Awards

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Please Note: This publication is for accredited broker use only and is not for distribution to consumers.

^ Depends on risk grade of Borrower

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La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

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1. Zenith's "recommended" rating indicates that it has high confidence in the manager meeting its objectives. The Zenith Investment Partners ("Zenith") ABN 60 332 047 314 rating referred to in this document is limited to "General Advice" (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. To view the relevant research information, please visit www.latrobefinancial.com The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.
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