Am looking to buy another property and have an application with RAMS as they are one of the few lenders that will look at us at present. I used to write loans with RAMS when they had the broker channel and at the time they allowed bonus in servicing (husband receives yearly bonus as part of salary package) and liabilities at actual repayments. On speaking with the RAMS guy this week, he said things hadn't changed and we had a good shot at getting approval.
Just got a call saying that they won't consider the rental income for the 3 properties we have in a trust as the income is owned by the company. yet they have used the loan repayments as a liability. Is this normal? Also, we've been told they don't normally use bonus in servicing. Dunno whether the assessor isn't quite up on this stuff or if policy has changed since they left the broker channel.
Has anyone experienced either of the above issues lately?
80 % er or more ?
Looking at an LVR of 90%
I think the assessor needs some educating. If you're a benificiary of the trust and the director of the trustee company, there's nothing stopping you from distributing the income to yourselves.
Are they taking the debt into account?
At 90% the bonus could be tricky. Can you prove it's been consistant for a few years?
Yeah, they are saying we don't service as they are using the debt in borrowing capacity but not rental income.
Bonus has been identical for the past 2 years and is due again at the end of the month for at least that amount. Had no probs with this when got a pre-approval with them late last year so just wondered if things had changed.
I think you need to get the application assigned to another assessor. Many of them don't understand trusts at all.
I recently had an experience with St George. Submitted a trust application, got a response with 14 separate outstanding items, including 2 years tax returns (for a trust set up a month before).
After weeks of phone calls faxes and emails, I lodged a complaint. The credit drones supervisor called me to try sort it out. 5 minutes later the list of 14 was reduced to 2 items to simply clarify a few points.
If you're lodging through a RAMS branch, point out that if they consider the debt associated with the trust they should also consider the income earned in the trust. Suggest a more experienced credit officer look at the file.
beachgurl said: ↑
Just got a call saying that they won't consider the rental income for the 3 properties we have in a trust as the income is owned by the company. yet they have used the loan repayments as a liability. QUOTE]
As RAMS are now Franchise channel only, your question is obviously directed at other potential or recent RAMS borrowers
However, in a previous life I had a similar response when RAMS was really RAMS
The Applicant was the Sole Director of the Company which was the Trustee of the Trust, and the investment property was held in the Trust.
The rent income was therefore deemed to be income of the Company, and as the Company had not been operating for the required two years, the rent income could not be taken into account for servicing, but the Director of the Company had provided a Personal Guarantee for performance of the loans, so therefore the loans had to be factored into servicing.
Not all lenders would assess the application in this way, however if you are applying to RAMS because of their lending policy, and have hit a snag with their servicing policy, there really isn't going to be much you can do about it.
I currently have a spate of 'Brothers' buying together, and am finding that many lenders have a policy / servicing conflict with this and insist on servicing as if the application was for two separate households.
A couple of years ago this wouldn't have been a problem - Joint Tenants would have been taken a 'A Household of Two Adults' for servicing, but now Joint Tenants are taken as 'Two Households each of One Adult'.
Even small changes in servicing policy can have a major impact on whether you can do the deal or not
But in answer to your question, yes, I have experienced this previously and with some applications this has caused the Applicant to change the application to a Personal Purchase instead of putting the property into the Trust due to the difficulties in arranging finance.
Lenders have no obligation to lend but it is sometimes like trying to hit a moving target when policy and or servicing changes occur. I have learned to ring first - even if a lender accepted a situation last week there is no guarantee that their policy hasn't changed this week!
KristineClick to expand...