Hi all. Just wondering the pros and cons of splitting a loan when looking at buying an investment property in the near future (next 6 months). I am currently with ME Bank my variable is 5.43% but dropping to 5.18% i believe after the interest rate cut with an offset account set up, they are also offering a 3 year fixed rate at 4.79%. Any thoughts/information be much appreciated. Thankyou for your time
By splitting a loan is a type of strategy for people that want to manage their risk (by fixing a portion of the loan) and take advantage of the benefits of an offset (by keeping a portion variable).
Now some lenders do offer an offset on fixed loans but ultimately you are paying a premium on the rate. I have used this strategy within my own portfolio.
Re the rates – they are not very competitive rates from ME Bank. You can definitely do much better – e.g AMP is offering 4.69% on 2 year fixed rates and many others are both competitive and offering cashbacks for refinances. Choose wisely before locking in a rate and lender.
TheFinanceShop | Elite Property Finance
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If you're considering fixing than leaving a portion variable is a good option.
Is this property a PPOR or an IP?
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]
Thank you Shahin and Jaimie M, the property is my PPOR
OK – than a separate variable split is definitely a good idea. That way, you get to utilise flexible features such as an offset.
You might find cheaper options than ME but you need to weigh up ALL of the costs associated with an external refinance. They include state govt. fees, lender discharge fees and incoming lender application fees where applicable. If there's LMI involved than it's rarely a good idea to switch lenders.
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]
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