All Topics / Finance / Macquarie (global limit) LOC

Viewing 15 posts - 1 through 15 (of 15 total)
  • Profile photo of TheShoulderGuyTheShoulderGuy
    Participant
    @theshoulderguy
    Join Date: 2007
    Post Count: 44

    Hi there just wondered if any one has any comments or feedback regarding this product. It is effectively an LOC account on PPOR with subaccount LOC  for investment loans etc.

    Cheers

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Hi Madproperty,
    I have had a macquarie LOC for nearly five years now and haven't had any problems. The only complaint was that they raised their interest rates by .3% very quickly after the US sub prime loan problems.
    After that happened I did a bit of shopping around and couldn't really find a better deal as my LOC is low doc. Everywhere else I looked wanted mortgage insurance for borrowing over 60% low doc. Macquarie doesn't ask for it up to 80%.
    They do have rather hefty exit fees though, but this may only apply to low docs like mine.
    Just my personal experience,
    Sue

    By the way, what's the global limit part mean?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    The majority of lodoc loans over 60% LVR are mortgage insured including Macquarie Bank.

    Whilst many of the retails lenders pass on the premium the interest rate is lower.

    Securitised lenders such as Mac Bank have little alternative but to pay it and charge it by way of a higher interest rate.

    The global limit they offer is a full x collateralised product so you can do better.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of TrentcTrentc
    Member
    @trentc
    Join Date: 2008
    Post Count: 6

    The Global Limit is the total limit of your borrowings.  Say you have 4 "sub accounts / accounts" each with a limit of 25k your global limit is 100k.  You can the adjust the limit of each sub account at anytime to fit with your requirements. 
    Financial planners are fond of the product as they can arrange for their client to grant electronic access to view their accounts when considering strategies etc.
    Considering their funding arrangements I agree that there are other options to consider.   

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Must one of the few Financial Planners who does not like the product !!

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Thanks for that Richard, I didn't realise they compensate for the insurance in the interest rate. Although my lodoc is at a lower rate than their advertised lodoc rate – I guess I might be getting a little loyalty discount as I'm near the end of the five year penalty period!
    Thanks also Trent, I do have a Global limit on my LOC between my sub accounts, I just never heard it called that before.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Sue

    You probably have one of the old step down rate products. Still a bit expensive in todays market but serves a purpose.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of TheShoulderGuyTheShoulderGuy
    Participant
    @theshoulderguy
    Join Date: 2007
    Post Count: 44

    Very Interesting comments and thank you for your posts. The reason why I posted this question was because my mortgage broker suggested this product as a way of wealth building and debt reduction. I will try to explain below:
     
    LOC 1 on PPOR
    LOC 2 using equity from PPOR to fund IP purchases IO.

    Broker suggested that via Neg Gearing a tax rebate would then be used to help pay down the PPOR over time, therefore increasing your equity in PPOR plus increase overall net worth via additional IP purchases as able.

    Over time global limit increase due to growing portfolio CMV.

    Does this make sense?? Is there a better way to build net worth and reduce PPOR debt?

    Richard and Trent you suggested that there are alternatives to macquarie?? Any examples ??

    Thanks again and look forward to your views.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Mad

    The formula your existing MB has put forward is simple debt reduction strategy and normal practice in advising clients.

    My suggestion would be 2 fold:

    1) Under the Mac Bank securitised facility the loans have to be X collateralised.  You could easily have a similar arrangement with a other lender and keep all of the loans separate.

    2) The rate of interest charged by Mac Bank on this product is not very competitive and therefore by using an alternative lender you would find the interest saving could be diverted into your PPOR loan creating equity quicker.

    3) Because the loan is a fully secutised loan despite i assume you apply on a full documentated basis it means that you have used up some of your borrowing capacity with the mortgage insurers. Personally i would never recommend a client take out a securised loan initially on a fully documentated basis as you may need the mortgage insurers down the track if you go for a lodoc / nodoc loan.

    4) The Global limit is all well and good but for additional purchased incurs additional costs such as revaluations, new application fees etc etc. This again can be saved with other lenders meaning more money to go into your PPOR.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of TheShoulderGuyTheShoulderGuy
    Participant
    @theshoulderguy
    Join Date: 2007
    Post Count: 44

    Thanks Richard, is it too much to ask what other lenders you are thinking about to keep loans separate and at a lower interest rate??

    Thanks heaps 

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Depending on the entity you have holding your IP would determine the lender specifics i.e Pty Ltd / Trust etc etc

    I can think of a couple of Pro Packs from the 5 majors that would suit with a considerably lower interest rate and set up fees.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of TheShoulderGuyTheShoulderGuy
    Participant
    @theshoulderguy
    Join Date: 2007
    Post Count: 44

    Thanks again Richard, PPOR currently with ANZ LOC. Would you suggest talking with them to discuss as would be 1st IP. 
    I am keen on a debt reduction strategy asap. I think interest rate MB quoted for Mac Bank LOC was 7.68% in early Dec 2007 but extra costs of doing transactions with Mac bank would increase the costs of doing business. Yes?

    Cheers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Mad

    Yes i do volume business with Anz and find them very good to deal with.

    Only problem you may have is the local branch may have no idea how to structure the loan with x collateralising the securities.
    It is not an area they have experience in.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of TheShoulderGuyTheShoulderGuy
    Participant
    @theshoulderguy
    Join Date: 2007
    Post Count: 44

    Who then is best to structure loans going forward. My Broker? My Solicitor? My Financial Advisor? Are you proficient in these areas Richard?

    Thanks mate

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Mad

    Yes i would like to think so.
    Neither your Fin Advisor / Accountant / Solicitor would have a clue about X collateralised lending.

    Shoot me an email with what you have any i can tell you the best way to set it up.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

Viewing 15 posts - 1 through 15 (of 15 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.