Hi Everyone,
I have been reading the forums on and off for the past couple of years – very informative! This is my first post – I have a query regarding some financing I am organizing.
What I intend to buy
I am looking for a one bedroom apartment located within the north side of the Sydney CBD which should be larger than 50 square metres. I would be looking to spend around $270,000 to $350,000 on the purchase. I would intend for it to be an owner occupied purchase.My financial background
I currently have a 50% stake in a two bedroom apartment located in Chatswood which was recently valued at $425,000. The other 25% stakes are held by my parents. There is no loan on the property. My income sources include a full time role at Westpac and the rent from the Chatswood property.I would be willing to provide a 10% deposit towards the purchase price. Also, I am under the impression I am eligible for the first home owners grant since the property was held in a trust and not in my name.
What I have found so far in terms of loans
Wizard has said they will probably offer me the Rate Breaker home loan which has the 5.71% rate on the condition that both the intended property and the Chatswood property are held in guarantee. They are asking for a $350 pre-approval fee and then a $750 application fee.Westpac is offering me the special employee-only package which doesn’t seem so special to me. The Rocket Repay home loan with 6.62% with no fees whatsoever – if I leave Westpac however I have to pay $300 a year in fees but keep the employee rate.
What do you guys/gals think? Is the Wizard idea good? Or is there a better option? I really like the 5.71% rate…
Simon
Simon,
1.2% penalty if you sell within 4 years. This is up to $4200 penalty.
Rate isn’t everything mate. List what you wish for in a loan and then reexamine the Wizard loan to see if it suits. You may find it lacks some key features.
But if rate is your only criteria it may well be perfect.
Depending on when the first property was purchased you may be entitled to the FHOG. Are you on title for this property?
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon,
Thanks for the response!
The Wizard loan limitations
I am aware of the following limitations:
– Monthly repayments only (no problem)
– No extra repayments allowed (no problem)
– No redraw (no problem)
– Obscene fee if repaid within the first 4 years (not a major problem)
– Is there anything I’m missing?My goal is to ensure the property will be as cashflow neutral as possible (I will put it up for rent in maybe 4 years time). I intend to do this by minimising my cost of capital as much as possible and then attempt to buy something below market value (I have been studying property valuation at TAFE as a hobby to increase my investor knowledge – but there is still alot to learn!). Then, if I do put it up for rent – make it fully furnished using the furniture I would have bought when I was living there on my own.
First home owners grant
“To qualify for assistance, neither the applicant nor their spouse (or de facto) must have owned a home prior to 1 July 2000, either jointly, separately or with some other person”. I never technically owned it. I was a beneficiary in a trust – my name was not on the title prior to 1 July 2000.“Neither the applicant nor their spouse (or de facto) must have owned and occupied a home after 1 July 2000”. I have had my name on the title after 1 July 2000. But I have not occupied the apartment.
Thus, it is my thinking that I am eligible?
Thanks again for the response,
Simon
Sounds like you are happy to are happy to stick with Wizard.
Just remember that they will run out of lending before mainstream lenders. If you keep buying there will be a time that you will need to refinance. Hopefully after the four years [baaa]
I have little experience with FHOG and trusts. Sounds like you may be OK. Might be worth calling their helpline on Monday. Look up the OSR in your state.
I hope it works out for you mate
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Simon
I guess if this is the only IP property you ever wish to purchase and are looking for the cheapest rate in the market warts and all then Wizard could be for you.
Personally i would use someone like Simon who can tailor make a product to suit your requirements now as well as in the future.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.39%**
Licensed Financial Planner
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Richard that is the worst response I’ve seen from you for a while. Forget patting MH on the back and read the question. The purchase is intended for Owner Occupier, the Wizard Loan mentioned is only for OO anyway, not IP’s.
Simon, if you know that you are not going to be in a position to make additional payments then the Wizard option may be a good Idea, and if you never intend it to be an IP then OK. Personnely I would not opt for a loan that did not allow additional repayment on my PPOR. If you deside down the track, that you want to be able to make additional repayments it will cost you $1000 + a minimum of a 1% increase in interest rate.
You mention that you can pay 10% deposit, I thing that the Loan you are talking about is restricted to a LVR of 80% also.
Mal
Getting out of your comfort zone, can help you become comfortable
Hi Simon,
Why don’t you check out this site to see what else is available (if you haven’t already).
http://www.cannex.com.au[biggrin]Todd Burns
http://www.freepropertyhelp.com.auI would just check into the Wizard rate of 5.71% – does it revert to a higher rate after 6 months?
Anita Marshall
Advanced Finance Solutions
http://www.advancedfinance.com.au
[email protected]Hi Aaah-chew,
did you know that as a WBC staff member that additional lending benefits are being able to borrow 90%LVR without MI if the loan is PIF or you can borrow 85% on loc without MI.
It may pay to do the sums as the interest saving you make may not outweigh the cost of MI , for at least the first couple of yrs (depending on cost of MI). Then you can refinance over to another lender to obtain cheaper rates and hopefully you will have had some capital growth when you do and no MI to worry about.Just a thought
ps just a little nervous as is my first posting even though I have been haunting the site for some time. [worried]
Heya, Standard loan features should include;
1) Lump sum payments option (no fee)
2) Early payout with no fees.
3) Fortnightly payment option
(things you should not care about are things like Maternity leave – reducing payments when partner is pregnant) You really should get these features as you dont know when your circumstances will change.
Westpac may be your best option. (Considering it has all the features above) Their Premuim Package (which has the $300 yearly fee) and a .07% discount for amounts over 250K (off the standard variable) is a good package. Lots of features and fair competitve rate.
IMHO (whoever you decide on) shouldnt be using the other property as collateral. Even if you have to pay the $1000 or so dollars for Mortgage Insurance, I wouldnt let them use it as security.You can use the equity in this property later on if you like to purchse more Investment Properties.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
