Forum Replies Created
- Banker wrote:How much is the security worth and how much do you want to borrow?
Property purchased for $540k. Deposit of $220k. Loan of $350k to cover all stamp duty and related costs.
Terryw wrote:Just ask all those who took out loans with RAMS or GE. I think they assumed something similar.Am I wrong in believing the reason they are currently in a bad position is that the exit fees on those loans are outlandishly expensive? Won't this scenario be removed with the legislation being brought in on July 1? I'm trying to read and learn as much as I can on all of this so if I have the wrong understanding it'd be nice to be corrected.
Banker wrote:Gary78, I see where you are coming from. Is the loan for invesment e.g. interest only? Let's run some calcs at 5 years int only, noting most people refinance or restructure to buy more property. If you go 5 yrs IO and include all establishment, Val and exit fees it will be a more realistic comparrison. BankerBanker,
This is my primary residence the loan will be for. I have requested to go interest only for the first 5 years with the ability to make unlimitted extra payments.
The calculations based in IO, with all fees included I believe would still result in a significant savings with State Custodians. Even more so if you take into account the extra interest paments I would be paying on the higher interest rate supplied by the banks actually be used to chip away at the principle on the State Custodians rate.
Terryw wrote:It could be a significant savings, but you are assuming:
– rates remain the same
– your loan runs full termWhat if you:
– want an offset account
– want an increase
– want to fix down the track
– exit after x years
– refinance after x years because they cannot lend you any moreI assume (rightly or wrongly) that the only way State Custodians stays in business is that their rates remain lower than the banks so that isn't an issue.
Understand it's unlikely the loan runs full term, but split those differences by 30 and thats what i'll be paying extra each year the loan is in place.So the fact that they recieve their funds via Advantedge which is a NAB owned business doesn't ensure any further security? I understand the fees involved in changing lenders within the first 5 years with State Custodians however I believe that the legislation being brought in on July 1 will reduce this exposure.
For me it comes down to a $ value for what I get. Using the loan comparison calculator here http://www.infochoice.com.au/calculators/loan-comparison-calculator/
and the below advertised rates and fees on a 30 year mortgage on $350kNAB – 6.74% $600 application fee – $0 per month
CBA – 7.36% $600 application fee – $8 per month
Westpac – 7.51% $600 application fee – $8 per month
ANZ – 7.41% $600 application fee – $5 per month
State Cust – 6.39% – $660 application fee – $28.75 per month + reduction of 0.2% after 5 yearsOver the life of the loan I will save
$30,831 against NAB
$86,278 against CBA
$99,188 against Westpac
$89,493 against ANZUnless i'm missing something, it's a pretty significant difference. What value do I get from a bank for that extra money?
Banker wrote:For those who don't know the structure of a mortgage manager: A mortgage broker can go to a lender like advantage, firstmac, GE etc and sign a mortgage management agreement. These are often referred to as white label loans. The funds come from the lender on a wholesale basis. When the lender sends statements they go out on the broker / mortgage managers letterhead. Problem is when the broker / mortgage manager moves on, goes broke, goes to work in a bank etc you are left without your contact person. If you call the bank / lender ( in this case NAB) they will simply refer you back to your broker / mortgage manager. I've met people who can't even find a person to change their repayment date, postal address, or provide a loan increase. In some cases the broker has moved and the address and phone number on the statement is no longer current. The reason the CEO answers the phone is that he is most likley just another broker with a laptop in his bedroom. P.s. White labels are provided at a base rate. The broker adds a margin as their trail income. The lower the rate the less the broker is making. If they are under cutting the banks don't expect any service; they can't afford staff and will be out of business in no time…This is the reason I chose to stay away from Pacific Mortgage Group. State Custodians seem to be set up a lot more professionally. At the end of the day they weren't the cheapest I found, but for a small amount extra over the life of the loan (~$5000 on a $350k mortgage) I think they'll be a good choice. Only time will tell.
Bazikki wrote:Hi Gary, just wondered how you got on with your mortgage search and who you decided to go with in the end?We're in a similar position to you…looking to leave Westpac…after the best interest rate possible…and also considering Pacific Mortgage Group given our frustration with the big 4 banks.
Just trying to get more info as to what a mortgage manager (i.e. PMG) is compared to a broker before making our decision.
Bazikki,
I also looked closely at PMG however I got a bit worried when the person who answered their 1800 xxx xxx phone number sent me an email with his signature being the 'CEO of the company'. I don't mind a 'small company' but when the CEO is answering the phones, thats a bit TOO small for me… also, he wasn't the most helpful or friendly guy going around. I also did a bit of a google search on his name and he had links to several other cheap mortgage companies so I ended up staying away.
I have filled out the paperwork with State Custodians only last week and so far they have been great. I've been dealing with Heidi there and she is really responsive, friendly and helpful. I tried to negotiate a reduction in the annual fees but wasn't able to do so.
Good luck with it all.
I found out through a bit more research that State Custodians get their funding via Challange Mortgages who recently were bought out by NAB and renamed to AdvantEdge. $120bn Loan Book according to the online info. Sounds pretty stable to me.
Cheers Ryan for the reply. I've got a mortage broker coming around on Tuesday evening and i'll see what he can offer.
Richard – Thanks for your reply. Although I know this is a property investment forum, this home loan will not be for an investment, but will be my primary residence. My search for any forum discussing home loan options hasn't come up with any other alternatives so I posted here.
As a 4th Tier lender, aren't they sourcing their finance from the same places as the big banks? What differenciates a 2nd tier to a 4th tier lender for instance? I'm trying to educate myself as much as possible before making the decision.
Gary
god_of_money – you state that NAB/CBA offer true offset acount where as PMG does not. If I deposit my salary into the mortgage account with PMG and whilst it is in there, it acts as an offset against interest charged, isn't that the same thing as having it in a separate account and being offset? Am I missing how the calculations are done?
In regards to 'PMG might colapse' I understand that is a risk, however I don't believe in living my life with that sort of pessimism. They have won awards from various magazines and websites so they must be doing something right. (although saying that, the 1 line reply's to my questions via email isn't the most customer friendly service i've ever recieved).
Banker – the establishement fees are $0 with PMG and through my work, I can get the $600 NAB establishment fee waived also. If I break whichever home loan I take out now, the set up fees for the next loan will be the same no matter what so I don't think that needs to be calculated into the comparison. In terms of settlement fees, CBA charged me $350 (along with $4000 for Early termination of a fixed interest loan – thanks very much). NAB advise their early termination fee is $900 which is $1300 more than PMG (amount would be saved within the first 2 years of taking out the PMG loan).
I understand the reluctance of people to take out home loans outside of the big 4, or what so called 2nd tier lenders, however if the companies are legit and have a good product, I'm leaning towards going with a smaller company which has a superior product.
Banker – I've looked at the exit fees for both. Pacific Mortgage Group advised their exit fee is 1 months payment (approx $2200) and State Custodians is a sliding fee (1% of loan in first 3 years, 0.8% of loan in 4th year, and 0.6% in the 5th year). In saying that, I am a little concerned about what happened with GE Money and RAMs and how any significant change in the finance/loan market would impact a smaller lender.
God_of_Money – I compared these loans using the loan comparison calculator on infochoice.com.au with the best of the big 4 (and I actually get a discount with the NAB through work) and it works out as follows.
Public Mortgage Group – $0 upfront, $0 ongoing fees, 5.81% p.a with unlimitted free redraw (giving ability to salary dump/offset)
NAB Choice Package – $0 upfront, $350 p.a ongoing fees, 5.99% p.a (my discount is 0.05% above their current .70% choice package discount). With the Choice you get all the bells and whistles of fee free credit card, etc however I believe there are better credit card options out there. I've heard from various sources that the current NAB variable rate won't sustainable and that they will join the other 3 big banks (bringing the rate up to ~6.24%) shortly.
Over a 30 year life of the two loans, the NAB option is $25,007 more expensive (going up to $45,949 with the rate equivalent to the other big banks). That's no small amount!
My previous mortgage was with the CBA with their wealth package and there was nothing special about the service they offered that would make me think i'm missing out on anything with a smaller lender.
