getting 1st mortgage – via broker or bank?

Hi Tess

To be honest i dont think your broker will be too keen on the idea of giving you back some of his commission.

If you consider that as has been mentioned in earlier posts Brokerage commissions have recently been slashed by the Banks because of the credit crisis which means the average Broker needs to write more business than he did previously merely to stand still.

Secondly a decent mortgage broker (away from the sausage factory franchise brokers) will offer you a lot more than just a home loan and will help you structure the loan so that he can work with you both now and into the future.

If you pay peanuts you do in this industry really get monkeys.

Nothing against Mortgage Choice but really that is about the last thing you will get …..Choice.

Hi tess

Good to hear that all the plumbers are gainfully employed elsewhere at the moment and not joining the finance industry,

Just from the initial comments you made about his advice I hope he didnt recommend a redraw facility given what you told him otherwise I would have doubt over his experience in loan structuring.

There is nothing to stop you buying an PPOR and making the loan interest only with a 100% offset account attached to it. I must confess i am not a Bank West lover as i like to see my clients settle on the due date and their levels of service both through the loan process and afterwards are a disgrace.

I have heard of numerous clients who did not settle on the required date as the Bank were not ready and incurred penalties.

Anyway we move on.

If you use a redraw then the interest on the funds redrawn (presumably for a deposit for your first IP) will not be tax deductible as the original purpose of the loan was not for investment purposes.

Also i cannot see why you would not consider a Line of Credit for a client who clearly wishes to purchase additional properties as this clearly identifies the funds use by having a separate account.

I must admit i own my own PPOR (which i could probably rent out for $1000 / week) and multiple IP's but my wife would never listen if i told her that I wanted to rent out our PPOR and rent ourselves. Sometimes you need to accept the fact that security of tenure is important and peace of mind especially when you are starting out is essential.

This does not mean that you have to live there for the rest of your days and this is why the structure fo the loan is important.
Using a redraw is just not the way forward and in my opinion fails all foundation requirements of establishing an investment portfolio.

Hate to say but maybe he was the plumbers apprentice in the morning …….

Tess

Dont get me wrong I am not recommending in any small way that you take a LOC FOR your PPOR loan in fact the only given what you have told us is to take an interest only loan with 100% offset.

Bank West Rate Tracker product DOES NOT have one attached.

Also they are certainly  not one of 2 institution to offer such a product so think maybe he was having you on.
The service levels relate more to documentation and settlement rather than approval.

With most lenders you can obtain an immediate approval or decliniture by way of electonic lodgment and this takes merely a matter of seconds. Such decision is then usually subject to provision of the required documentation. The problem lies when you come to settle and Bank West tell you they are not ready. Your Vendor does not want to hear such a strory and certainly has the right and in most cases will charge default interest. Bank West unfortunately will not cover this for you.

To give you an example i did a commercial deal with Bank West at the end of last year where the loan was 100% approved and the Credit Manager rang the client to confirm this. 3 Attempts at documentation later settlement day was upon with no actual documents to sign. The client was fuming and Bank West ended up settling albeit a day or two late without any documents having been signed. Client was charged default interest and the Bank ran the risk of not being able to register its mortgage had their been a title problem.

You need a loan and a lender that has what you want not only from Day 1 but can evolve with you during your changes of circumstances.

Dont forget it is not always necessary to put all of your funds into a deposit and pay the loan off as quickly as possible as your path for the future may change and the ideal home for today may become a IP of tomorrow.  This is where a LOC can be useful in your loan planning.

Hi Fujitsu

Firstly welcome to the forum and I hope you enjoy your time with.

This day and age you dont have to sit down with your mortgage broker as you can deal through email and online and in fact many of my deals are done for clients througout Australia who i have never actually me.

With regards to brokers i guess it all depends on what you are after. If you want a discount job then sure go to someone like Refund but dont expect much. If you owned a new mercedez car would you take it to the dealer or some back street cash only garage.

What i am getting at is there is often more to the loan than merely a quick fix low interest style product. Most clients use a Broker as they are lokming for a longer term relationship and for someone to structure the loan correctly so that they can buy additional properties in the future whether they be IP's or another PPOR.

Personally i am not a great lover of the CBA/Colonial  deal as the MISA offset is not a real offset in the full terms of the word and think there are a couple of better options.