Hi everyone,
I own 1 IP, which I am in the process of buying my partner out. I got a mortgage broker to come out and show me the best deal.
Basically for this mortgage I want to have a offset or direct salary credit, with redraw.
This is the loan she showed me:
Up to 90% LVR
6.07 % with an 100% offset account, without any fees on the bank accountNo application on or monthly fees
1 annual fee of $300 dollars
I.O or P+IAnd it has the option where they will add the mortgage insurance (if needed) on top of the loan (so they are lending you more than 90%) to free up more cash
Does this look alright?
I am located in Sydney
thanks
Nathan
Hi Nathan,
It looks like a professional pack that the mortgage broker offered you. The discount on the interest rate (I am guessing .5% off the standard variable rate) isn’t too bad, but is not the most compeditive on the market. To advise you further can you tell us the total loan size involved?
This will determine what packages you qualify for (and how big the rate discount is).Also, do you know if the mortgage broker told you that you qualified for the proposed loan through many different institutions, or were you at the upper end of your borrowing capabilities?Sometimes this will also determine loan selection.
Last, but not least do you think that you will be over the 90% LVR mark or under it with the new proposed loan structure in place?
Cheers, and happy investing
Nathan[
][]There are better deals around, especially without the $300 pa fee which sounds way too expensive to me.
Your AAPR (true interest rate) would probably be more than the standard variable (6.57%) with the fees you are paying.
Always ask your broker for the AAPR on a loan to get a better indication of what you are paying.Don’t get excited about the bank adding the mortgage insurance onto the loan amount – this is standard practise as they’d rather lend it to you for the extra interest repayments.
Thanks for your feedback guys,
The Ip is valued @ $340,000. I have more equity available but want to take the loan to 90%, so I can have more cash available for another IP in 6-12 months. On my current wage and rental income, I have the borrowing capacity of $500,000 +, so I don’t think risk should be an issue.
The only other features I want in this home loan, is either a 100% offset account, or direct salary crediting with redraw (free), so I can save interest while saving for the next IP
The above loan was through Sun Corp (I think), there were two other very similar loans the broker offered, one was from CBA, and the other from Home Line.
Thanks for you help
Nathan
Hi Nathan
I think St George has the solution your looking for. It’s offering a special with it’s professional package. Based on your loan size they will offer you 0.60% off the standard rate for the life of the loan. The other features are:
– $300 application fee.
– $5 monthly fee.
– 100% offset.
– Redraw (min $2,000, cost = $25).
– Early repayment fee of $1,000 for 3 years.The 3 year AAPR for this product is 6.01% whereas the 3 year AAPR for the other product is 6.16%. The reason I calculated the AAPR over 3 years is to ensure you maintain your flexibility.
If you would like more information about this loan or if you would like a free report about how to choose the best loan for you then please visit http://www.prosolution.com.au.
I hope this helps.
Regards
Stuart [
]Hi Nathan,
Looks like you’ve already been given good advice. Do your homework and look around. When do you need to decide by?
Having dealt with one of the banks listed above, I can say, be very careful as there are some catches that we’ve encountered in trying to set up our accounts for investing purposes. Sometimes the rigidity of banks can cost you, where as upfront cost with other lenders may cost slightly more, but give more flexibility. Ask the person doing your loan what they’re commission is. This is also negotiable, I have found. Especially if you are going to do repeat business.
Negotiate what YOU want and need with the managers, not the worker bees. Sometimes the banks offer what you need, without the frills and it will cost you less because you don’t have to pay for things you don’t use, but they won’t often tell you this.
Check out some of the postings in the forum.
Cheers
Sooshie [
]There are no problems, only solutions
Hi Nathan,
You may want to have a look at the variable options package from Heritage. It has direct salary crediting and redraw (fees involved), with a current variable interest rate of 5.9%, and an AAPR of under 6%. It is a more basic set up than the pro packs mentioned, but is very compeditive.
Sooshie’s post has some great advice.
Hope you end up with the best loan to assist you achieving your investment goals!
Cheers and happy investing,
Nathan (not a bas name you have there!)[
]Thanks Nathan! (of above posting).
This is just a link to a story on Today Tonight, Melbourne based Current affair program. Of course it’s up to you to decide how you take it but I found something to note anyway. This is for you Nathan(newbie)all others who don’t know the ropes (and we never ever really know everything anyway – which is a good thing, because it keeps each day fresh to learn something new!) [
]Sleepy Sooshie [|)] but happy nonetheless [
]There are no problems, only solutions
Wow! I told you I was sleepy.
Here’s the link
http://todaytonight.com.au/stories/521639.html
Another “DOH”
Sooshie [
]There are no problems, only solutions
Thank You everyone for you replies, they are very helpfull. I will definetly keep exploring the different options as you said, I do have a bit of time up my sleeve, so I will use it to my advantage.
The broker doesn’t charge any fees, but she doesn receive a percentage depending on the lender.
I am meeting with St George next week, and another broker at the end of this week. So, I will keep you up to date with my progress.
thanks again for all your help.
Nathan
You might want to also check out the Westpac Rocket Professional Package offered through Wizard. I got a LOC at 5.97% with no monthly fees and a bank account with Westpac with minimal fees also. I think the application fee was $300 for the year.
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Hi Roofarmer,
You got a good deal. Westpac were very compeditive there for a while, but to get the highest reduction in the variable rate the now ask for your combined borrowings to be 500K or over. There are still pro-packs out there with a curent variable rate of 5.97 around though. It seems to go in cycles.
Cheers, and happy borrowing!
Nathan
Hi Guys
Just a quick note. Heritage charge a break fee of one months interest if you repay a loan (this exists for the life of the loan).
E.g. If you have a $100k loan on interest only and repay the loan in 5 years time then heritage will charge you one months interest as a repayment fee.
You should include this cost in the AAPR calculation to make a fair comparison.
Nathan (newbie) – good luck with St George. I think they are the way to go.
Cheers
Stu[
]
][
]
]
The topic ‘Is this a good Loan ?’ is closed to new replies.
