Hi there all
Couple of quick questions that may be a little obvious or silly
One of my investment loans for aprox 278K is about to come out of a fixed rate in a few weeks and im looking to refix for 4-5 years with renewing interest only term at same time (stability and investment strategy)
Commonwealth bank arent the most competitive and was wondering what was involved in switching? currently on a wealth package with.5 discount on standard fixed rate
Do you need to go through a new application with all income, work details etc
Will be looking to renovate the property and increase loan/redraw/line of credit some how during this period. are there any such things with a fixed interest only product?
Can anyone give me some advice on what to do (other than leave it variable)
Would be much appreciated
Thanks
Paul
Whole new application I am afraid. Many things to consider too besides the rate.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Agree with you that CBA are certainly not the most competitive when it comes to rate but as Terry points out this is on off many factors to consider.
Regretfully many investors seem to forget that the structure of the loan and flexibility of the lender is a lot more important.
No point in having a sharp rate when your lender or broker doesnt have the same ideals as you when it comes to growing your portfolio.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Paul
As the others have mentioned – rate should rarely be the primary driver behind arranging finance.
I'd also be careful with fixing for 5 years – it's a long time and it's difficult to effectively plan this far ahead. What happens if the lender you're fixed with decides they don't want to allow you to access equity for instance? If you needed to externally refinance – the break costs for a 5 year fixed loan will be very high.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
CBA's 4 and 5 year rates are very competitive and only ING's 5 year rate is better than CBA by 10 basis points however I don't think its worth the switch.
If you are planning to draw upon equity then you do need to understand the risk of fixing with CBA, then ordering a valuation and the valuation potentially coming back poor. This will restrict you from moving to another lender that potentially has a higher valuation.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
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Hi Paul, If you are going to fix then it is a good idea to access the equity you need for renovations at the same time. You could have the existing loan fixed and then a LOC or an interest only loan with offset for your renovation. Fixing removes the flexibility and you don't want to get stuck and then not be able to borrow what you need. The only fixed rate loan that I know of that has full redraw is Heritage Bank. But fixing for 5 years is a very long time if this is a property that you will be renovating and creating more equity. Can you see 5 years into the future? Make sure that the fixed loan is exactly what you want as the penalties to move or sell are extrraordinarily high. Talk to your broker and go over all your plans and goals for the next 5 years before you make a decision. Good luck.
Westpac has got redraw on fixed loans too
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
I know this is a completely biased statement but I really don't understand the point of online comparison websites.
What is the point of going with lender A that has the cheapest rate but you cannot fit in their policy due to LVR, Security Type, Age and dozen more criteria?
What's the point if you do not service with that lender?
Also do they tell you how to structure your application in order to enable future purchases efficiently?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Couldn't agree more Shahin. They provide such a basic snapshot without taking into account the larger, longer term picture.
Thankfully that's why we'll always have jobs
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Right on the money there Jamie. Those sorts of websites prey on the ignorant who get easily sucked in at the sight of a low interest rate figure.
When I engage with people in social circumstances, talk always comes around to what sort of work we do. When I tell them I'm a broker, they usually come up with a story of how cheap their current mortgage rate is and how they are saving money. I normally find a chink in their figures and advise them how it's actually costing them. They can't believe it because there programmed to think lower rates are better.
Bankers also do their best to keep brokers in business. Had a client come to me last week who went direct to a lender and they messed with him for 4 weeks before they told them no. Servicing was tight but I seriously could not see what the issue was, and I ended up obtaining unconditional approval pretty quickly elsewhere.
Cheers
Tom
You have made one post and have listed a website – I would suggest people be wary of this sort of thing!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Paul
I would suggest using an online compare home loan tool to quickly and easily find all of the rates from a large range of lenders.
It saved me alot of time.
Best of luck with yours!
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