All Topics / Finance / 0.25% RBA cut……was your bank Naughty or Nice?

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  • Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    So now that the RBA has announced a 0.25% rate cut…..was your bank Naughty or Nice did they pass the rate along in full or did they $$profit by not passing along the full rate.
    And if they did pass it along….how long did they take? eg. Pass it along the same week or delay the pass along in order to boost profits for a few weeks.

    See how your bank did at – http://mozo.com.au/reserve-bank-interest-rates

    I’ll post my own personal experience St George Bank Portfolio loan – (http://www.stgeorge.com.au/personal/home-loans/manage/latest-interest-rate-change) has said they will pass along the full 0.25% BUT not until 20th of Feb a full 3 weeks later after the cut was effective……
    So this brings my investment loans ($900k) including discounts from 4.99 to 4.74%

    How did your bank do?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Wow 4.74% for a 900K loan assuming it is less than 80% lvr the Dragon did you no favours.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    Yes it is less than 80% LTV (about 71%), one property $700k and one property $665k, we actually borrowed $965k but have paid it down to about $885k since we set it up late last year.

    We’re probably in a situation hat we are going to be looking to purchase another property in about 3-4 months again around the $600k range which will push to LTV up a bit (76%). 700+665+NP600?=1.96m with a portfolio loan of around 1.5m

    If you think you can get a better rate than 4.74% for a portfolio loan then I’d be interested in hearing from who and for what costs.

    The one thing I really like about StGeorge is apart from the annual $300 fee there is only a $100 setup fee for each sub account for each of the properties underneath that along with the choice of fixing/variable for each of the sub accounts.

    But hey….you’re the expert…..who has a better deal than 4.74% ?

    Profile photo of Mick CMick C
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    @shape
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    With a loan of $900 under 80% you will find most borrowers will be on 4.44- 4.54% after rba cut..
    once your loan goes >$1.5M it be 4.34- 4.44.

    all with 100% offset ( not ness a portfolio loan as such) and not your online banks…but big- med size banks.

    Mick C | Shape Home Loans
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    Profile photo of DeanCollinsDeanCollins
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    Hi Mick,

    So about 4.69-4.79 before the 0.25% cut or about 0.25% less than we are paying now with St George (or approximately $2,250 per year better off).

    I know the portfolio loan is a “more expensive” option than StGeorges regular mortgage but the reason we went with them is we are intending to purchase 1 apartment per year for the next few years and the $100 setup fee for each new property we added was the closing point.

    If we could get the same functionality at a rate cheaper than St George we’d be interested in hearing however for us its important to be able to pay interest only, to pay down as much as we wanted, to add additional properties with minimal costs/fuss.

    Profile photo of D.T.D.T.
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    @dtraeger
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    I did pretty well out of this.

    I was on 4.74 at Westpac prior to the drop as @cjaysa; negotiated me a good rate. More recent properties are with CBA who also passed on full discount.

    So 25-28 basis points will save me a few grand a year :)

    D.T. | DT Property Management
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    D.T. Why did you move over to CBA from Westpac?

    Are you able to add additional properties with your CBA mortgage without “renegotiating” a whole new mortgage and the added expense?

    What were the setup costs involved?

    Profile photo of D.T.D.T.
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    @dtraeger
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    D.T. Why did you move over to CBA from Westpac?

    Are you able to add additional properties with your CBA mortgage without “renegotiating” a whole new mortgage and the added expense?

    What were the setup costs involved?

    Hi Dean
    I didn’t move over. I outgrew WBC’s servicability model, and started fresh with CBA (kept existing properties with WBC though).

    By “adding additional properties” it sounds like you’re trying to cross collateralize, something heavily discouraged if you want to keep buying IP’s. You need to map out a way forward with your broker to avoid this.

    D.T. | DT Property Management
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    started fresh with CBA

    That’s the whole reason why we chose St George in the first place so that we didn’t have the hassles/costs involved in setting up a new mortgage each time…..

    The St George portfolio loan is supposed to allow us to add additional mortgages for only $100 setup fee. Each sub portfolio loan is separate and NOT cross collateralized and can be bought/sold as required (Well at least that’s the theory anyway……we’ll know in 3-4 months from now when we add the third property to the loan).

    But for $300 a year so far its been a pretty good package but I’m wondering if we could have done better than 4.99% (moving to 4.74% on the 20th of Feb).

    Profile photo of D.T.D.T.
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    That’s a terrible idea and your broker should be fired

    D.T. | DT Property Management
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    Profile photo of Corey BattCorey Batt
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    The portfolio loan is subpar in comparison to a properly structured setup imho – be careful to make sure you’re not cross-coll’d even if they’ve said you aren’t. Many a time I find clients who had previous branch/other brokers loans who were adamant that they weren’t crossed, only to find out otherwise!

    You’re paying a premium rate for the portfolio product btw, which will cost you several times more in interest per annum – a standard standalone STG loan only has $100 loan establishment fee too.

    • This reply was modified 7 years, 9 months ago by Profile photo of Corey Batt Corey Batt.

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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    so what exactly makes the St George Portfolio loan sub par?

    Profile photo of Corey BattCorey Batt
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    @cjaysa
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    You’re paying a higher rate for no realisable extra features. The rate difference can easily equate to over $1000 per annum in more interest charges. It’s just a Line of credit product

    The Portfolio loan is toted generally as a product for cross collateralising your entire portfolio, they give it a pretty name to make the client feel like a sophisticated investor. Much the same with AMP’s Global Limit loans, Macquarie Global borrowing limits etc.

    The Portfolio loan package fee = $395 too, not $300.

    A good way to flip this around – why is the portfolio loan superior to the standard variable advantage loans?

    These products do have a place, but they’re used for very specific purposes such as debt recycling.

    Corey Batt | Precision Funding
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    Profile photo of DeanCollinsDeanCollins
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    I had to check and yes you are right its $395 not $300 per year

    To answer your point the advantage, as i see it, going with this loan is that “supposedly” when we want to purchase the next property its supposed to be a simple $100 fee without the need to go through the whole process to apply for “another mortgage”. Like I said we haven’t gone through this process yet so we’ll see how big a PITA St George is about the next purchase in 3-4 months.

    As for your comment about us overpaying at 4.99% (4.74% after feb 20th) so far I haven’t seen anyone else quote a lower rate for a “line of credit” offering where we have no restrictions in how much we can pay down or redraw at any time without fees or minimum/maximum amounts.

    The only “real” downside I see with the St George Portfolio Loan is they don’t offer an offset loan, which for us due to tax purposes we liked taking advantage of.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    I can think off the top of my head without looking any deeper 1 major lender who is at 4.54% for their offset product and you would probably end up getting that at 5-10 bps less.

    There are a number of others you would be just as competitive.

    If you can put up with their back end admin Suncorp on loans submitted before the 20/2 are at 4.49%.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Jamie MooreJamie Moore
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    so what exactly makes the St George Portfolio loan sub par?

    Hiya

    It’s a LOC that you a premium for – you can do the same thing with a standard IO loan.

    Some people get into a big tangle using the portfolio loan. They think it provides ease – but they end up with a crossed up mess of properties.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of Corey BattCorey Batt
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    @cjaysa
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    <div class=”d4p-bbt-quote-title”>DeanCollins wrote:</div>
    so what exactly makes the St George Portfolio loan sub par?

    Hiya

    It’s a LOC that you a premium for – you can do the same thing with a standard IO loan.

    Some people get into a big tangle using the portfolio loan. They think it provides ease – but they end up with a crossed up mess of properties.

    Cheers

    Jamie

    Absolutely agree. 3/4 clients I come across with these existing portfolio loan arrangements have nasty x-coll setups, poor mixing of investment and non investment debt and or fixed rates in the mix!

    I’d put the availability of offset accounts around 10 levels more important than LOC features – for the most part these loans aren’t needed when there are products available which can provide the same flexibility, with more features at a lower cost.

    Corey Batt | Precision Funding
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    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Absolutely agree. 3/4 clients I come across with these existing portfolio loan arrangements have nasty x-coll setups, poor mixing of investment and non investment debt and or fixed rates in the mix!

    Yep – same here.

    Nothing worse than when a fixed rate or two is thrown in the mix as well :-(

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    If you can put up with their back end admin Suncorp on loans submitted before the 20/2 are at 4.49%.

    Hi Richard, whats wrong with Suncorp?

    I checked their site however and it looks like our loan would be 4.79% not 4.49%

    Standard Variable (SVR) & Access Equity (LOC)
    Home Lending $750,000 and above
    Borrowings 70% to <=80% of property value 5.99% p.a. -1.20% p.a. 4.79% p.a. 5.16% p.a.**

    Profile photo of CashBackCashBack
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    @cashback
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    Hi Dean,

    I think what Richard is the current Special that Suncorp is offering at 4.74%pa and $375 annual fee waived which expires next week 20 February 2015 pre RBA 0.25% rate cut i.e. 4.74% – 0.25% = 4.49%.

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