Hi there,
I've found a CBD apartment that I like, and am now starting to organize my finances before making an offer. This is the first time I'm doing this so any help would be much appreciated. I plan for this property to eventually be my PPOR – I will live in it for 6 months to get my FHOG, then rent it out until I'm ready to move back in.
Since I don't have any other properties or mortgages, will it still benefit me to see a broker? Will I get the same result if I went to see individual banks myself? Is there anything extra that a broker can offer me over a bank? If I do go through a broker, what kind of fees will I be expecting for his/her services?
Also, does anyone have any suggestions on what kind of loan would best suit my situation?
Thanks!
Hi Citybuyer
Firstly welcome to the forum and I hope you enjoy your time with is.
I must of course declare a personal interest being a Broker myself but like to think i will give you a open view to enable you to make your own mind up.
A good mortgage broker will give you more than just the cheapest loan in town but look to work with you in structuring the loan in a manner that suits your circumstances both now and in the future.
Any Bank lender will of course tell you that their range of product is the best going around and certainly will not tell you to take your business elsewhere. A mortgage broker will look past the interest rate and look at the other factors of the required loan and make his recommendation after considering all of the client personal facts and requirements.
Another complication maybe the fact that you are looking at buying a CBD unit and this itself is not a desirable security for many lenders especially if the unit is small or a large complex. Many lenders will only finance a percentage of the overall units within the block and therefore a mortgage broker can look at all of these issues and advise you according.
Finally depending on the loan to value ratio the loan maybe mortgage insured. Remember the premium with each lender varies considerably and part of the MB's job is to assess the whole loan package including all of the associated costs.
As far as any charge i cannot speak for the whole of the mortgage broking industry but i personally do not charge for any of my residential mortgage broking services as i receive like many other brokers a commission from the lender to whom i refer the business. The client does not pay anything more for this service and I like to think that i add value to my clients loan due to my experience and knowledge.
Hopefully I rest my case lol
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for your prompt reply! If I am planning to rent out my property after 6 months, would I be better off getting an I&P loan or an IO with an offset account? How do I eventually pay off the principle with an IO loan? Do I just transfer the balance of my offset account into the loan?
I remember reading on this forum that if I choose to use the money in my offset account for another property, then the full amount of my previous loan would be tax deductable…or something along those lines… can you explain what this means??
Thanks again for your help!
Hi CB
Personally if you were a client of mine YES i would suggest an IO loan with a 100% offset account attached.
With an IO loan the balance remains constant so the equity build up comes with the capital growth in the property itself.
If however you wished to pay off the principal then all you would do is transfer the funds from the offset account to the mortgage balance.
One advantage of using an offset account over a redraw is that whilst the interest savings are the same with the money sitting in the offset you can draw out the funds at any time and use them for a deposit for another property whether it be a PPOR or IP.
The net loan balance on the first IP would increase and the full amount of the interest would be deductible.
Richard Taylor | Australia's leading private lender
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