Hi,
I'm looking towards my first IP shortly (Brisbane based). I'm looking to go variable rate and ensure I have the ability to pay off the loan faster (probably around $170k loan).
Q1 – Any recommendations at the moment on which lender(s) to look at?
Q2 – What about package types? I read a thread which spoke about the ANZ Break Free account. Are there specialised account packages that are good for property investors I should be aware of?
Thanks
Hi Mixedup,
Depends on your circumstances. Are you going to apply for a Fulldoc or LoDoc? Do you have another property with equity that you can use for a deposit? Or are you wanting to apply for a 100% lend?
I suggest you chose a loan with a 100% offset account. this way you have flexibility with your loan and can offset interest charges.
The banks professional packs are always a good option to consider, they generally offer a .7% discount off their standard variable rate but they also charge an annual package fee of $300 to $350 depending on who you go with. Also they usually have a minimum loan amount of $200,000 and above to qualify for these discounts. You might want to consider a lender outside the big four to get what you want.
There are lenders that offer .7% discounts with loan amounts below $200,000. Your broker will be able to recommend a good lender for you.
regards,
I can go Fulldoc. I'm looking at property value at around $300k and putting down a 20% depositor via about 1/3 savings + 2/3 re-draw of my existing PPOR (which is fully paid off). Hope that helps people understand my situation..let me know otherwise.
If your borrowings are over $200k any of the major's will be able to help. Also AMP have a good basic variable product out at the moment with a 100% offset account with no annual or ongoing fees.
cheers,
I'd look at a IO loan with a 100% offset. I personally like the ANZ IO loan on the breakfree package. They are very good with their products and allow the broker to order the valuation (and receive a copy) and they are good for loan increases too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:I'd look at a IO loan with a 100% offset.Can I pay extra however on such a loan to reduce it quicker, and hence lower interest quicker?
All you would need to do is deposit the extra funds into the offset account and this will save you interest.
Richard Taylor | Australia's leading private lender
mixedup wrote:Terryw wrote:I'd look at a IO loan with a 100% offset.Can I pay extra however on such a loan to reduce it quicker, and hence lower interest quicker?
You can pay extra without penalty at anytime, but I agree with Richard – put the extra in the offset and it will save the same interest.
Once you pay down a loan if you want to withdraw the money again, the ATO considers it new borrowings and the extra interest incurred will only be deductible if the use of the money was business/investment. So that is why it is best not to pay down any loan.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:mixedup wrote:Terryw wrote:put the extra in the offset and it will save the same interest(sound of penny dropping)
Got it! What threw me was I was assuming an "offset" account was like the one I had years back on my house whereby it was just that interest you made on the offset account could be moved to the home loan and didn't get taxed.
Question: What about Line of Credit versus Standard Variable Rate (with redraw, offset etc)? It seems LOC would be great but is about 0.1% more, so I guess after tax this is really only 0.1 * (1 – 40%) = 0.06%, so about $180 a year for a $300,000 loan. What advantage would you really get for this extra relatively small amount for a LOC? Ability to use same LOC for a 2nd IP purchase perhaps? Is LOC the way to go these days?
I cannot see the point in using a LOC, other than to release equity which can then be used soley for investment.
It would be disasterous to use a LOC for personal expenses and to then use it for investment related payments as well as this will cause all sorts of tax problems.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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