All Topics / Finance / Can I get a loan ?

Viewing 20 posts - 121 through 140 (of 146 total)
  • Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    ummm and he didnt even tell you?

    It means what ever you paid him will occur interest as well because it’s “borrowed” :(

    Ohh well learn and live.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Guys,

    need some opinions, is it now time to fix my homeloan? I paid 7% variable now with Homeside. They offer 3 year fixed for 6.54% and 2 year for 6.49%.

    Michael, you might know how much is the cost to fix homeside variable ? Currently my loan is IO. Can you do fix on IO ?

    It is noted here that the comparison rate for 3 year fixed is 7.24%, what does that mean?

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Oh and the comparison rate my current variable rate is 7.11%.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    In this global climate do you think rates are likely to go up or down?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Unlikely up, but could be flat, has been for a while

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    In that case if you fix you will be saving 0.46% for 3 years off what your paying now. If rates go higher you will save more, but if they go down then you won't be saving as much.

    You also have to factor in other factors such as break costs. What if you want to change banks or sell the house for example

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Based on the comparison rate, my current variable is lower than the one of fixed rate. Does that mean in term of real cost, my current one is already cheaper than the fixed one ?

    Change the bank, unlikely… sell the house, very unlikely, but only God knows.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    To fix the rate will cost you $600 as an existing customer- paper work and re-application fee ( needs to get access by credit again- but you should pass easily )

    The CR is the true value of the loan and rate, generally speaking a CR for fix loans only “looks” higher because it’s based on 25 years; and after your fix rate finishes homeside automatically place you on their standard variable rate which from memory is 7.7% that’s why the CR for homeside fix looks ridiculously high.

    I dont know of anyone that would go on SVR after a fix- you would either go on homesides special rate or re-finance out to a different bank, simple….so if you need go for a fixed for 3 years on 6.54% and then back to discounted VR after the 3rd year of 7% then the CR for this “scenario ” is 7.03% roughly off the top of my head, dont quote me tho lol.

    Also what LVR are you on?? 80-90%?

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    Also, Terry has mentioned a VERY VERY important point.

    You need to work out what you want to do with the place, and what the goals set are etc… because once you fixed if you decide to sell OR refinance it will be very costly in terms of break fees. Three yers fixed is a long time, so make sure you know what your doing and NOT just looking at the rate.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of mushirkhanmushirkhan
    Participant
    @mushirkhan
    Join Date: 2011
    Post Count: 12

    Hello Guys,

    I have been following this conversation very closely and it has been very interesting. I am planning to buy property in next 6 to 8 months in Melbourne. I just wanted to share my views for Ferdinand and his offer for fixed rate.

    Ferdinand: Congrats on becoming Property owner. Looking at your determination and commitment to your property i think you should stick with it for at least for 5 years and take the full advantage of the offer that has been made to you, because you can catch up alot in this three years with the discount of 0.46% (also make extra payments if you can) on your loan. 3 years down the line if you are going to buy IP’s then it is going to give you strong base for it. And you can still sell your occupied property after 5 years for a good sum of money if you want.

    I also agree with Michael to have your goals set, or look at it as a business plan for next 3 to 5 years.

    Regards,
    Mushirkhan

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Guys,

    I am back… with same old problem :) hahaha.. four months have passed now, and I am enjoying a lot the house, slightly further than where I lived before, but transports are great, so not really a big deal.

    My experience is very difficult to maintain motivation with offset account, especially when Christmas is coming. I previously forecasted $4,500 extra repayment made on the top of interest, if I use normal P+I loan. But with the I only + Offset A/C, I only manage to save $2,300 which is only 50% of the target.

    The current 2 year fixed rate is 6.14% (Homeside) is tempting me again. Currently I am paying SVR 6.80%. My observation from last interest rate cut where it was a very difficult decision made by RBA and NAB only passed 0.2%, it takes 3 x 0.25% interest rate cut to be equal with the 6.14% offered on 2 year-fixed rate.

    And the game changer is that I have agreed with my wife to pay off the principal everytime we accumulated $20,000 in offset A/C, that means offset A/C will not be useful at all. We think that we prefer to take benefit $230 interest expense straightaway and hit the loan hardly. I am anticipating to receive $40,000 lump-sum mid next year.

    I know that IO + Offset A/C is good for discipline people with investment oriented mind. But it seems that is not the case with me and my wife. My wife is quite reluctant to invest in property, I mean we want to have 2-3 investment properties, but not 10-15. We also prefer to buy a business if we have extra money in the future.

    So, back to my question, with my expectation, goal and past experience ( at least 4 months), is 2-year fixed rate 6.14%, RIGHT FOR ME?

    Additional information: I’m on 80% LVR and $420,000 total mortgage

    Thanks

    Ferdinand

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    No- Stay with Variable and ill explain why Ferdinand.

    1. Fixed rate does not offer the offset account- so your offset account will become void once you go fix.
    2. Your expecting a massive bonus- in which you can NOT place into the mortgage/offset if i turned into a fix product. – if anything go half half….planning ahead is important.
    3. You don;’t have a lot of savings…not sure what sort of “financial” backing you have…but should you lose your job do you have anything to back up your mortgage for 2-6 month? will you be force to sell? Of course a good insurance product can provide some sort of protection; something i encourage.

    —-

    Fixing is NEVER and should NEVER be about beating” the market it’s about planning and peace of mind.

    – You know your outgoing
    – No need to worry about rate raise
    – Can plan

    If you want to play the “beat the market”game…then why not go for the lowest on the market- 5.99% 3 years etc….For me fixing it about the protection it offers ( above 3 points) IF you “beat” the market then take it as a bonus- this way you will be more happy with your decision.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

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

    Should not the Broker who recommend the loan to you not be giving you this sort of advice this is what he is getting paid for.

    Sorry to sound calous but these Michael, Jamie, Terry etc offer their valuable advice for free and yet it is your current Broker who is receiving remuneration.

    Cheers

    Yours in Finance

    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 ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    IMO, In regard to Fixing is NEVER about beating the market, it might be the correct when the fixed rate is in Contango (Fixed>Variable), but when it is in Backwardation (Fixed is lower than Variable), I would think, by understanding the yield curve, beating the market is achievable, in my opinion.

    http://www.bloomberg.com/markets/rates-bonds/government-bonds/australia/
    please check link above.

    If we see in the graph, 3y-int rate should be the lowest, and at the end of year 2, there will be sharp drop in interest rate, at least .20%, that means the difference between 5.99% and 6.14% will be inferior to the natural movement of variable rate.

    I am still thinking about other factors you mentioned above. I have an income protection insurance of $2,400 per month, enough to cover the interest + principal a bit, at the event of something bad happened to me, but doesn’t cover a mere ‘losing job’. As I mentioned before, my wife and I agreed to repay the principal every time we accumulated $20,000 in our offset account, I guess the offset account will not function well anyway.

    I give myself this one weekend to think more thoroughly, I guess it is a quite big decision to make.

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91
    Qlds007 wrote:
    Should not the Broker who recommend the loan to you not be giving you this sort of advice this is what he is getting paid for.

    Sorry to sound calous but these Michael, Jamie, Terry etc offer their valuable advice for free and yet it is your current Broker who is receiving remuneration.

    Cheers

    Yours in Finance

    I am sorry Richard to sound taking advantage from all of you guys. But is that not the purpose of this forum to share knowledge and to provide view and opinion? I might not be Michael’s client at the moment, but in the future, who knows? Be honest I am quite disappointed with my current broker, and he only gives one advice which everyone gives here, IO + Offset A/C without offering any alternative. I understand that it might be the best option for you guys, investment-minded people, but not everyone is same.

    I received exactly same question from my best friend in Brisbane, and he is also confused about this IO+Offset A/C, because it is rather an unconventional idea not to repay the principal.

    Well, I can’t thank enough to you, Michael for always being available to offer advices here and his generosity or Terry with his straightforward advice during the process of getting my property from the beginning, even until now. But if it is sounding like taking an advantage, then I politely request not to answer my questions.

    I am an Accountant in financial services industry but I am still on the way to get my full qualification done and my knowledge sharpened, and I would be happy to share my knowledge in my area of expertise either in taxation and or financial services in the future when I am confident enough with my knowledge for free in this kind of forum.

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91
    Shape wrote:
    No- Stay with Variable and ill explain why Ferdinand.

    1. Fixed rate does not offer the offset account- so your offset account will become void once you go fix.
    2. Your expecting a massive bonus- in which you can NOT place into the mortgage/offset if i turned into a fix product. – if anything go half half….planning ahead is important.
    3. You don;’t have a lot of savings…not sure what sort of “financial” backing you have…but should you lose your job do you have anything to back up your mortgage for 2-6 month? will you be force to sell? Of course a good insurance product can provide some sort of protection; something i encourage.

    Hi Michael

    As I mentioned before, I would like to start to repay the principal, hence Offset A/C won’t be as good as if I don’t repay principal.

    I just checked with Homeside, he confirmed four things.
    1. No costs whatsoever for fixing the rate
    2. The process takes 4 days and only involves me and my wife calling them
    3. My loan structure will return to SVR – 0.70% with Offset A/C reactivated after the end of the fixed period
    4. Max Repayment on principal every year is up to $20,000

    I told you before that I am anticipating monies next year, around same time this year. Hence, I will fix the rate for 1 year for 6.14%. And after the fixed period lapsed, I will pay that lump sum to principal, then review the fixed rate again and might fix it again. Every year $20,000 is about right.

    Does it sound like a solid plan? Let me know the flaws, if there’s any.

    Thanks Michael for always being such a help.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    What about staying as is and just paying  extra off each week via direct salary deposit?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91
    Terryw wrote:
    What about staying as is and just paying  extra off each week via direct salary deposit?

    Hi Terry

    Many thanks for your reply. I still couldn’t understand, if it doesn’t cost me even one dollar, I can go back to SVR – 0.70% + Offset A/C in a year time, I will repay the principal (which is same thing as your suggestion), why 0.66% less interest which translates to $230 less interest expense every month is not a good thing? Forgive me if I’m little bit naive or I don’t know what everyone in this forum knows.

    Ferdinand

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I haven't done the calcs and wasn't even referring about rate etc. Just that this is an option.

    Also if considering fixing have you considered the RBA could drop rates again within a year?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ferdinandchferdinandch
    Member
    @ferdinandch
    Join Date: 2010
    Post Count: 91

    Thanks Terry

    I am considering to fix the rates only for a year. Of course, it is everyone’s common sense to think that RBA will drop interest rates. But the question are: how quick? when? will the bank pass it in full (if RBA cut too often)?

    Well it is just my thought. As what I mentioned before, I learned two things from last RBA cut. First, it is not an easy decision for RBA to cut interest rates , and second, my bank (NAB) did not pass the cut in full just because they want to protect margin and get $62 million profit (5 basis point difference).

    Thanks anyway. I hope apart from the rates, there is no technical flaw with my idea.

Viewing 20 posts - 121 through 140 (of 146 total)

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