Forum Replies Created
Hi Hannah. Sorry no one has replied to your post yet – nothing to do with the contents I'm sure. With your scenario, people choose fixed interest rates for a reason, some regret it later others are pleased, but regardless of which way you choose (you can also split a loan too and 'hedge your bets' or structure it to suit your lifestyle….) the MAIN PROBLEM with exiting a fixed rate loan early is the whopping early repayment fees, sometimes politiely called 'break costs'. This can be thousands (even 10's of thousands) dollars, so generally people would not exit a fixed rate loan early without good reason. However in your case, if as the last line of your post states, there will be no break charges, and the only problem you see is a variable rate loan, it's purely up to your own preferences and if doing so will help you with your finances. Sounds like a good offer if the only drama is switching your chosen interest method….as long as you are happy with variable (like around 70% of other people) All the best
Hi Leilah. After a certain period, the loan converts from interest only (say, 1st 10 years) to P&I for the remaining term (last 20 years) with payments adjusted acordingly.Hard to plan that far ahead eh? All the best.
Hi. You generally would not refi a loan like this for the first 2 years. You will be up for 2% of the loan amount (for first two years)plus the discharge fee, currently $295. This loan product is a great lo-doc loan though, with a very competitive interest rate, currently 7.47 %, so unless you are selling the property, it would hardly be worth the effort to refianance I would have thought. I notice some so called 'on line ' type loans' marginally cheaper rates, but not many. You would be able to get a new valuation done and increase your loan easily if your property value has increased of course without paying much at all. Maybe the LOC (which would be a higher rate) could be consolidated back to the other loan split to save you money, but without knowing your reasons or needs I am only speculating. All the best.
The reason your mortgage choice broker, and other brokers won't recommend these lender types in most cases is……because they are not available to the broker channel, so of course the broker gets no commission. Even if they were, they would get less, as the margins are so low. Ah ah!!!!
Of course they will not say 'yep, they are good and cheaper, go for it. That said, neither would I….. although I am not working as a 'broker' as such. These loan types (not onedirect though really) are effectively wholesale loans – a small margin is added onto the base interest rate, and they are not running branches, large staff numbers, and advertising campaigns etc. However, I do think there is a lot to be said for dealing with someone with local presence, that you can establish a relationship with, who owns or is actively invovled in the buisness…….AND can help you with some handy advice and handholding. ……to me that says a mortgage broker or non bank lender. – unless you are happy enough to go it alone – I suppose in all fairness, unless you have an 'all in one' type loan, Joe Average won't spare their loan a passing thought for a few years. Lack of service IS a risk, but I should point out I in the past have dealt with some 'big' lenders, or more well know n ones, from a broking perspective, and the lack of support, speed, and response (always with a range of excuses) from some has been nothing short of horrifing, and the cause of some embarrassment. I will spare them embarrassment from mentioning names, but I'm sure you get the idea. Now……that Cabernet Savignon beckons……Hi Passnby – I stand by my earlier comments (see my second paragraph in first post) about not rushing into anything, and to leave it for now based on the information you presented, but if it is going to cost you a $15k fee to refi from your current lender FORGET IT – or you'll never have that BA or the XE!!!!l Lenders charge 'breakcosts' (so called) to get out of a fixed interest loan, and you will never make that sort of money back if that is what they want out of you. Add that to any mortgage insurance and that is money just flushed…….. IF you are keen to refi, wait until your fixed rate period has finished, and rather than locking it in again, you would wait until they swap you into their 'standard variable' loan, and then look at getting out to your new lender/loan of choice then. It's hard enough to come by the stuff as it is without giving it to the bank for nothing. Just remember if and when you do consolidate, the point about the seperate split at the shorter time for your old car loan. Maybe get the guy you were talking with to set out an approximation of all the costs for the loan, inc LMI, and confirm any exit penalties from your current lender, and I think you will see there is a lot of money involved for very little gain…….another 12 months will go quick! All the best..
Opinion only of course……..No worries – Moosehead. it really comes down to what you want and what suits you at the present time, and remembering there is no such thing as the 'best loan' – too many variables. If you have a 20% deposit or more, and perhaps looking for a PPOR and have a great relationship with 'your local bank', depending on the loan size, many find this the easy (and why not) and quickest solution, although looking around can often snare you a better rate or product with less or no application fees. Looking for an IP or chasing a loan with 5 or 10% deposit? Then that levels the playing field a bit, and often is the reason people look elsewhere, as the so called big 4 banks can often treat you like a leper at that point. Just remember, everytime you apply for a loan pre-approval it comes up on your credit file, which can make other lenders wary. There's better things to do than approach a heap of different lenders, and I would be inclined to do most of my research on the internet first, using each lenders website. Work out some of the loan features you do and don't want, and then see what c ouple of lenders can offer product wise (or special wise) and go from there, or if you don't have the time, this is where many choose to use a finance broker, which can be a good option, particularly if there may be some special circumstances or situation involved. You can no doubt appreciate someone that works for Westpac, CBA, Rams, ANZ, ING, Wizard, Bankwest etc etc will want to sell you their product – and if they don't they should be fired – the go is to make sure they treeat you with a bit of dignity and service, and give you a couple of loan options a some 'handy tips' along with it. If you are a bit unsure, or want to save time chasing, brokers 'in theory' help you choose from a range of lenders based on your requirments – and obviosuly will only suggest a lender on 'their' panel of lenders, hopefully giving you an option of the 2 or 3 most suitable choices to discuss the 'pros and cons' together. This is a free service, which you should not pay for. What is it they say….pick a card, any card……..
PASSNBY – Love the idea – I'm a sucker for memorabilia etc – especially old motorbikes. me and my better half (ie wife) own a BA Ghia, 5.4 ltr V8, with leather, sunroof, factory sat nav etc – lovely car and rides great with the factory sports suspension, but does not get a lot of use except bigger trips. (it's OK on juice, but juice is $$$) All the best with your ESP goal for the shed…….should be a great environment to have a glass of Cabernet in!!!!
STARGAZER. – No worries – Please excuse me if I over simplify, but just to explain clearer…..the problem the others were addressing, is just refinancing everything, inc a car and or personal loan into one big new 'mortgage' loan, all at 25 or 30 years, which of course means while you are saving interest on paper, you are paying it off over a longer term, thus costing heaps more. The way to do it would be as follows (All the figures are for example only, and for whatever reason may not suit everyone)You have a property say worth $250k, that you owe $150k on currently paying 7.95 % interest, and have had it for X amount of years, and a car loan that you took over 5 years, with three years left to go, you are paying 13% interest on with a remaining balance of $20k. . When you refinance your homeloan, whether you draw out additional equity for investing or not, you would have one new loan (say at 7.5% interest), and you would split it into Two componants – one split for the $150k you owed on your mortgage, (ie $150k, @ 7.5% interest, you would take over a 25year term) and one split for the old car loan, being a $20k loan, over a term of THREE YEARS (not the same term as your house loan) at the new lower mortgage rate of only 7.5% . So tour immediate saving is the difference between the two interest rates, in this case 5.05%. Repayments will be less too. Now, to go one step further (I know you did not ask this, but just in case someone else is reading) if you wanted extra money for investment (ie deductable ) purposes, such as to fund a property/property deposit/buy shares etc etc what you would do in the above example (assuming the home is your PPOR) is to introduce a THIRD loan split, for the remaining equity in your home up to 80%LVR, which would be around $30k in this eg, and have that as a line of credit or even another basic loan (for 7.5%) and have the funds 'sitting' in redraw ready to go, and with each of these loans, you get a seperate statement as if they are 3 seperarate loans (which they are technically) all under the umbrella of your home. Makes it easy to keep track of things, and at tax time your accountanct will love you!. Hope that clears it up a bit on how thi works. Sorry if I have droned on a bit, but it's free info, and I think it makes perfect sense for anyone interested in saving money and 'creating' it at the save time. All the best.
Hey, welcome to the forum Corhig. Good question. In theory this is how it should have been done, and many lenders in fact do IF you have taken the loans out as stand alone products over a period of time, and not been convinced to sign any extra 'paperwork'. .You will see under 'security' on the loan what is offered, and it should only show the one property if not cross secured. That said, many lenders do feel the need to either suggest, trick you, or simply neglect to mention that your properties will be or should be cross secured. Cba and St.Gorge come to mind, especially once you start with so called 'portfolio' and 'package products'. The thing is, that in many cases the 'bankers' do not envisage someone buying more than one or two properties, so don't apprecitate the need to structure the loans seperately, (which it is not such a big deal in that case if you are holding and don't plan on selling or expanding) in other cases it is a deliberate ploy in order to make it hard to leave.
That's the short answer. All the best.Yep.
Welcome to the forum passnby. It doe'snt sound like the expense is worth it for you. Maybe rather than spending money on further property improvements, knuckle down and get rid of as much as that car loan as you can.
Refinancing can be a costly excercise if there is 'not much equity' in it, and if you are refinancing a $238k loan, for $240k, unless I have missed something, or you are being fleeced blind by your current lender, I can't see much point at all. (opinion of course)
As a sidepoint, perhaps try Rams first for a comparison, because they may not penailise you at all with your past credit history, and they have three mortgage insurers to choose from, compared to the two other lenders generally have – can make a b-i-g difference.
Again, it depends on who you are with , and who you switch to, but using the figures you have provided, I would suggest it will actually cost you close to the $2000 you may gain just in costs changing – even half that, at an interest rate 25 basis points less (1/4 percent – hyperthetical) will take up to four years in saving to make up what you spend to do it for a loan your size.
Naturally, it is a bit different if you can find someone to refinance at the $250k – many lenders will only actually refinance with 'cash out' to 90% now, which may be the problem rather than your credit history. (Rams will do 95% )All the best with whatever you decide, but no need to rush from the sounds of things.
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