I see WIZARD went the other way and “DROPPED” thier Home Loan rate [blink] Thier rates look pretty good at this point in time..any thoughts from the Mortgage Brokers here?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorKeep in mind that Wizzard is now owned by GE and at this stage they are measuring the success of the business on loan volumes not profitability …I would jump on it asap.
5.87% is a very low rate. It’s 1.45% below the standard variable rate. There are some restrictions with these cheap loans so they’re not for everyone.
1. Only for purchase of owner occupier property (no refinance or investment).
2. Can only make monthly P&I repayments. This is a big downside because making fortnightly repayments can save a lot of money… around 20% to 25% of total interest. So if you make allowance for this (and add 20% onto the interest rate) it is equivalent to approximately 7%… not such a good deal anymore.
Not for everyone. But no one can deny… it is a very cheap rate on the face of it
Cheers
Stu
It is about the lowest rate available. If low rate is what you want, and lets face it most people do, then go for it.
Ask your wizard consultant if the loans are fully securitised – I believe they are.
This increases your exposure to the Mortgage Insurers even if the loan is under 80% and you don’t pay an LMI premium. At some point this may affect your lending ability.
All the best,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Ask your wizard consultant if the loans are fully securitised – I believe they are.This increases your exposure to the Mortgage Insurers even if the loan is under 80% and you don’t pay an LMI premium. At some point this may affect your lending ability.
Could you please explain the above. Aren’t most mortgages securitised anyway? Thanks.
Woodsman,
Have a read of:
http://www.rba.gov.au/PublicationsAndResearch/FinancialStabilityReview/Articles/fsr_0904_1.pdf
As you can see it is regioanl lenders, credit unions and mortgage originators such as Wizard etc that securitise their loans.
The mainstream lenders such as the big four have a very low number of securitised loans.
Thanks for the question – always good to research and refresh my knowledge!
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks for the information guys
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorOriginally posted by Stuart Wemyss:5.87% is a very low rate. It’s 1.45% below the standard variable rate. There are some restrictions with these cheap loans so they’re not for everyone.
1. Only for purchase of owner occupier property (no refinance or investment).
2. Can only make monthly P&I repayments. This is a big downside because making fortnightly repayments can save a lot of money… around 20% to 25% of total interest. So if you make allowance for this (and add 20% onto the interest rate) it is equivalent to approximately 7%… not such a good deal anymore.
Not for everyone. But no one can deny… it is a very cheap rate on the face of it
Cheers
Stu
Stuart,
You have quoted fortnightly P&I repayments saving 20% to 25% interest over P&I repayments paid monthly. I have previously run the figures through my mortgage calculator and found this not to be true, eg;
$300,000 loan P&I over 30 years at 7% interest. The interest you would pay over 30 years if you pay monthly is $418,524, and fortnightly $416,810, a difference of $1714, ie 0.4%difference. Thus what you claim is nonsense.What I do believe is most claims for fortnightly repayments are based on the assumption the notional monthly P&I payment is divided by two and paid fortnightly, thereby actually increasing your annual repayments and shorting the loan period.
A few more figures to illustrate.
The monthly option would require payments of $1995.91, and the equivalent fortnightly requires $918.98, however if you divide the notional monthly by two giving $998, and pay this fortnightly it reduces the term from 780 payments to 614 payments and the interest is $312,479. Again it is because you have increased your ongoing repayment amounts, rather than switching to fortnightly repayments.Tasman
Thanks Tasman.
The reason that fortnightly repayments ends up saving borrowers is becuase you are essentially making 2 extra repayments per year.
I didn’t actually do the numbers myself. I did a Google search and relied upon St George’s numbers.
See http://moneymanager.smh.com.au/articles/2005/03/08/1110160815144.html
The only way to save money is to repay as much as you can as often as you can. The point I was trying to get across is the Wizard loan restricts the ability to make more regular repayments.
Cheers
Stu
Stuart,
Referring to Wizard loans, restricting repayment periods to monthly does not mean the loan is more expensive than another variable loan paid fortnightly. You can simply increase your monthly repayments to whatever level your budget and planning allows to achieve your goals.Cheers
Tasman
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