Sorry folks, I couldn't find a more appropriate category to post this, and I have seen a similar topic in the past, but cannot seem to find it now. So…
I am trying to discover the highest interest/best place – to park and increase savings. I've used http://www.infochoice.com and come up with 7.2 to 7.35% from Arab Bank. Also, I've always been wary of the stock market. (Too much like gambling for my liking, and far too much to learn before you know your savings are safe.)
Does anyone have any better suggestions?
And what are people's opinions on Arab Bank?Thanks for reading…
Allan
I know several property investors/developers who are always looking to borrow money and will pay around 15%.
PM me if you need more information.
Cheers
K
Allan do you havd a home loan yourself ?
Richard Taylor | Australia's leading private lender
How do you borrow money at 15% to develop and still make a profit ? Why the hell would you borrow at 15% when you can borrow at less then half that. If the developers have to pay that much to get money then it sounds a bit dodgy to me.
Arab Bank certainly are offering a very high rate considering the RBA cash rate is currently 4.25%. The thing to remember is that savings accounts have variable rates so they are subject to change. So although Arab Bank is currently offering around 7% and you open an account and transfer money into it, they can reduce the rate at any time thus making it less attractive.
If you don’t need your money for a period of time then consider a term deposit as they usually have better rates than a savings account. Take a look at Ubank which is part of the NAB group and also Suncorp which offer a negotiated rate for amounts over 100K.
Qlds007 wrote:Allan do you havd a home loan yourself ?Not currently, Richard. We're deciding if to buy our first PPoR, or invest. We do plan to pack up and take an extended holiday (possibly 3 months or more). So I'm looking to earn the best interest we can during that time.
Casper_1000 wrote:Arab Bank certainly are offering a very high rate considering the RBA cash rate is currently 4.25%.Makes you wonder, doesn't it? There's many giving interest rates above the RBA CR. We're currently with BankWest. Our special 12-month introductory interest rate ended last month – but they're still giving us 5.5%.
Quote:If you don't need your money for a period of time then consider a term deposit as they usually have better rates than a savings account. Take a look at Ubank which is part of the NAB group and also Suncorp which offer a negotiated rate for amounts over 100K.I have glanced at term deposits in the past, but they always seem a few % lower. (The ones I find anyway!) I'll have a look at the ones you mentioned though – thanks!
Linar wrote:I know several property investors/developers who are always looking to borrow money and will pay around 15%.Someone in the forums has contaced me in the past about something similar. (Could even have been yourself.) I'm afraid I'm risk adverse, and the info was a little too thin to round out my understanding. I'll still consider though, thanks.
would would you wack all your cash into a term deposit and loose 10%+ of its purchasing power per year ? Buy gold instead, and you will make nice profits in 2009
H …..
The development projects must have a much higher return than 15% for them to borrow money at this rate and still make a profit. They get as much as they can from the banks and then use private lending for any shortfall.
I used a private finance company about 12 months ago and paid them 11% when all the banks were about 7 – 8%. Private finance was the only finance I could get at the time. Was it worth it? Absolutely. I bought a reasonably large subdividable block of land for $375,000 and refinanced it six months later with a bank who valued it at $485,000 without us doing any subdivision. Once subdivided the land will be worth about $1M. Sure I paid a higher interest rate but at the time it was the only funding I could get. Better a slightly less profit than not buying it and making no profit at all.
Cheers
K
Up until about a year ago there was a lot of private financing and even solicitor funding available. Banks may only lend to about 70% LVR and even then if you are developing, some banks will not release funds until the subdivision is through. Furthermore, development financing is driven largely by pre-sales, which might not always be possible.
A developer may typically finance with a commercial bill, where the interest capitalises and is rolled over at the expiry of each term. Essentially the bank will reassess the situation when the time comes to rollover the debt and if they feel uncomfortable with it because of some material adverse effect or change in circumstances, they could call in the whole debt.Now you could be in the middle of a development when this happens to you, and then you only need a couple of hundred grand to tide you over and finish off the development – so what would you do? Pay an interest rate of 15% or more to finish the development and at least have the chance of making a profit, or be forced to sell the incomplete asset in a fire sale and have all your hard work go up in smoke?
So rather than jump through all the banks hoops, some developers would prefer to just get the cash, and knock up the development in double quick time. Then they can flog it off as quick as possible, or hold onto them to enjoy an income stream sooner.
That being said, it is pretty hard even to get private client financing these days, particularly for developers.
Casper_1000 wrote:If you don't need your money for a period of time then consider a term deposit as they usually have better rates than a savings account. Take a look at Ubank which is part of the NAB group and also Suncorp which offer a negotiated rate for amounts over 100K.Hi again… I looked up term deposits at the two places suggested.
http://www.ubank.com.au is offering:
3 months – 5.95% p.a.
6 months – 5.65% p.a.
9 months – 4.71% p.a.
12 months – 4.61% p.a.…and http://www.suncorp.com.au :
3 months – 5.65% p.a.
6 months – 3.60% p.a.
9 months – 3.60% p.a.
12 months – 4.55% p.a.Unless my math is *really* bad…
… aren't these less than Arab bank's 7.25%?I guess I'm just wondering about the comment "usually have better rates". This is why I've never understood why people would use term deposits. Especially since most online savings accounts calculate interest daily and pay monthly (thus compounding – earning interest on interest)… Whereas term deposits seem to pay only once at the end of the term.
So is there something simple I'm missing here?
… aren't these less than Arab bank's 7.25%?You must be logged in to reply to this topic. If you don't have an account, you can register here.
