Hi All
Can you guys please comment upon the below Refinancing option. My property is currently PPOR but will become IP in 24-36 months time. As I understand from previous posts, I need to have offset account and not just redraw as I would have problems withdrawing extra cash when I want to make my property as IP.Appreciate your observations on this.
Thanks
Loans.com.au 6.58% / 6.59% variable home loan for new and refinancing
$0 loan application fee
$0 ongoing fees
cash rate linked for first 5 years
for loans up to 80% LVR
100% redraw offset accounthas unlimited redraw with no $1000 limit, b-pay, visa debit access
Had another client ask me about it only the othre day.
Firstly it is an offset / redraw account so not a proper offset account and would not be good if you want to rent it out.
Secondly every loan is mortgage insured irrespective of the size of the loan or the lvr.
Might be ok now but why involve LMI when you dont have to.Ask youself who actually lends the money and then remember what happen a year or two with such lender.
Think to yourself how do they do it and is it a special offer for a week or two before they put the rate up.
Personally they are dime a dozen lenders like this and they come and go like the seasons.
For an investor who intends to be around for the long term i would give them a wide berth.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Totally agree – I’d also question there cash-out policy (which is probably non-existent).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Qlds007 wrote:Had another client ask me about it only the othre day.
Firstly it is an offset / redraw account so not a proper offset account and would not be good if you want to rent it out.
Secondly every loan is mortgage insured irrespective of the size of the loan or the lvr.
Might be ok now but why involve LMI when you dont have to.Ask youself who actually lends the money and then remember what happen a year or two with such lender.
Think to yourself how do they do it and is it a special offer for a week or two before they put the rate up.
Personally they are dime a dozen lenders like this and they come and go like the seasons.
For an investor who intends to be around for the long term i would give them a wide berth.
Cheers
Yours in Finance
Thanks Richard
The offset account is a 'propper' offset account. Its a seperate account linked to the loan and the daily balance of the account is offset 100% against the loan. So, for example, if you have a loan of $100k with $10k in the offset account, you will only pay interest on the net difference which is $90k.
One of the advantages of this account, especially for a property investor is that you can deposit additional savings, your salary etc into the account and access your funds via a linked Visa debit card which you can use via EFTPOS, BPay, ATM (we are linked to the Westpac, St George and Bank SA network), online and phone. There is no mimimum redraw and no fee for a redraw.
You can also make additional payments direct to the loan account and redraw, again no minimum and no fees.
The borrower only pays mortgage insurance when the loan is over 80%.
loans.com.au (https://www.loans.com.au) is owned by Kim Cannon who has been in the industy for approx 30 years and is also the owner of FirstMac. FirstMac is a wholesale funder to a large number of brokers and other non-bank lenders and is one of the largest non-bank lenders in Australia. Being a wholealer, they arent as well known as many of the retail brands they acttually fund.
The loan itself is linked to the RBA cash rate for the first 5 years, so while no one can predict future rate rises, one thing we offer that few do is this RBA rate link which means that the interest rate will go up or down at the same rate as movements in the whlesale cash rate.
The insterest rates we offer are not honeymoon rates, they are our standard variable rates and better still, we dont charge a DEF or exit fee so if a better offer does come along, its prety easy to change lenders.
Hope this answers some of the questions you may have and feel free to contact me on 13 10 90 if you need forther assistance.
Rgs
AngusJamie M wrote:Totally agree – I'd also question there cash-out policy (which is probably non-existent). Cheers JamieHi Jamie
Yes we do have a cash out policy/option available on our loans.
Feel free to give me a call on 13 10 90 if you would like additional information.
Rgs
AngusHi Angus
I have known Kim for 20 of those 30 years here in Brisbane and hate to say many of my clients still have nightmares over the old Nationale / Tonto products so regret to say no faith there.
Always good to see a member join up the same day a comment gets made on their organisation so they can immediately write a 300 word response promoting their services.
I assume you will be hanging around to freely assist other forum members without continually promoting your services.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Oh whilst you are there Angus.
Can you tell us is the loan mortgage insured when the lvr is less than 80% irrespective of who pays for it.
This is a critical credit question for most investors and i look forward to your reponse.
On the matter of not charging a DEF or early repayment fee if it is like any of the other First Mac products not a matter of not wanting to it is a matter of legally with effect from July 1 not being allowed to.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Have you considered UBank or Beyond the banks? They too have 6.5% for refinances.
Beyond can give heavy discounts
I haven't heard of any better rates.ksherwell wrote:Have you considered UBank or Beyond the banks? They too have 6.5% for refinances.
Beyond can give heavy discounts
I haven't heard of any better rates.Kane,
UBank product is definitely not good for Investors who would possibly rent out their property in future as they only offer Redraw. No Offset.
Beyond the Banks- I just had brief look at their website. Attempted to check Fact Sheet and got error "File not found" under Download section.I am looking forward to Angus's Reply to Richard's Question in regards to Loans.com.au offering.
Qlds007 wrote:Oh whilst you are there Angus.
Can you tell us is the loan mortgage insured when the lvr is less than 80% irrespective of who pays for it.
This is a critical credit question for most investors and i look forward to your reponse.
On the matter of not charging a DEF or early repayment fee if it is like any of the other First Mac products not a matter of not wanting to it is a matter of legally with effect from July 1 not being allowed to.
Cheers
Yours in Finance
Thanks Richard,
Im happy to provide basic factual information about our loans and the company to ensure that people are in a position to make informed decisions. Im not seeking to offer any advice or to suggest one product or lender over another. If that were the case, I would see that as promotion.
In terms of LVR below 80% we insure some not all loans and wen we do we pay the LMI.
Hope this is of assistance
Cheers
Angusksherwell wrote:Have you considered UBank or Beyond the banks? They too have 6.5% for refinances.
Beyond can give heavy discounts
I haven't heard of any better rates.Hi Kane,
I would re-think about going to “beyond the banks”- i use to be accredited with them ( stopped as of March 2011) ( they use to be headed by PFG- they have no separated…and it looks like it’s going down hill for BTB) – also note BTB do have a DEF fee ( not sure what will happen after july 1st)
Ubank on the another hand seems ok – new guy…not much history ; so can’t really comment…but as last poster said correctly not the best for investors.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
https://www.loans.com.au/Pages/Home.aspx
Ummm did loans.com.au just increase it’s rate from 6.59- too 6.69 ??? without RBA movement, or was it a special rate etc???
and it looks like they changed the “5 years RBA linkage” down to 3 years..wonder what else has changed?
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Since this has become a bit of a random "hows this lender?" thread, I was wondering if any of you have had dealings with State Custodians. I'm in the process of refinancing my PPOR there, but I guess any feedback before moving onto an investment loan would be useful.
I chose them because of competitive rate (6.79%), flexibility (i.e., split loan, 100% offset for portion thats being used to paid off existing PPOR loan and LOC for the portion thats unlocking equity). I also like the loyalty bonus of extra 0.2% after 5 years as against the usual honeymoon type arrangement. That said, I'm still not actually a customer so can't comment on how it all goes once its setup.
Shape wrote:https://www.loans.com.au/Pages/Home.aspx Ummm did loans.com.au just increase it's rate from 6.59- too 6.69 ??? without RBA movement, or was it a special rate etc??? and it looks like they changed the "5 years RBA linkage" down to 3 years..wonder what else has changed?Michael, As per their press release on 31st May 2011 (https://www.loans.com.au/Pages/Media-Release-31-May-2011.aspx )
“loans.com.au’s new variable rate of 6.69% pa will have a special 0.11% discount for new loans during the month of June, making it 6.58% pa, the lowest online mortgage rate; and the 0.11% discount applies for the life of the loan,” Mr Cannon said.
I have applied for loan with them before 30th June and would get 6.58% which seems to be the best rate with excellent features (According to http://www.Ratecity.com.au)
amsaini15 wrote:Shape wrote:https://www.loans.com.au/Pages/Home.aspx Ummm did loans.com.au just increase it's rate from 6.59- too 6.69 ??? without RBA movement, or was it a special rate etc??? and it looks like they changed the "5 years RBA linkage" down to 3 years..wonder what else has changed?Michael, As per their press release on 31st May 2011 (https://www.loans.com.au/Pages/Media-Release-31-May-2011.aspx )
“loans.com.au’s new variable rate of 6.69% pa will have a special 0.11% discount for new loans during the month of June, making it 6.58% pa, the lowest online mortgage rate; and the 0.11% discount applies for the life of the loan,” Mr Cannon said.
I have applied for loan with them before 30th June and would get 6.58% which seems to be the best rate with excellent features (According to http://www.Ratecity.com.au)
Fair enough- let us know how u go with the lender…it would be great to hear some feedback from Cust
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Angus are you saying that these loans with an offset/redraw account would satisfy the taxman as a ‘proper’ offset account?
Similarly, Richard, are you saying that they would not?
Do either of you have evidence to back this up, or is it just interpretation? Why doesn’t FirstMac/Kim Cannon apply for a ruling on this and dispel all doubt with these products, since they seem to be pushing them to Investors?
cheers
gabsman wrote:Angus are you saying that these loans with an offset/redraw account would satisfy the taxman as a ‘proper’ offset account?Similarly, Richard, are you saying that they would not?
Do either of you have evidence to back this up, or is it just interpretation? Why doesn’t FirstMac/Kim Cannon apply for a ruling on this and dispel all doubt with these products, since they seem to be pushing them to Investors?
cheers
Don’t need to go that far regarding ruling … doubt the company would spend that time and money for that purpose anyway.
To know if it’s a true Offset account or not…just need to find out if it as 2 dual account + if the “loan” increase when funds are pulled out from it…if the loan amount changes then it’s not a true offset- as the interest paid are mixed up.
A true offset account will HAVE 2 account seperated…they should no affect each anther another then lowering the interest
What we in the accounting world call a “dual account”http://law.ato.gov.au/atolaw/view.htm?locid='TXR/TR936/NAT/ATO
( need to copy and paste the whole link)
Dual Accounts6. The customer operates two accounts – a loan account and a deposit account. To be acceptable, it is essential that there be no entitlement, either in law or in equity, to receive interest payments or payments in the nature of interest on the amounts credited to the deposit account. The only benefit arising in the deposit account should be the right of the customer to ensure that the interest payable on the loan account is reduced in the way described in paragraph 7.
7. The reduction in the loan account interest referred to in paragraph 6 should be achieved by offsetting the balances of the two accounts. That is, the interest payable on the loan account should be calculated by dividing the outstanding loan principal into two components. A reduced rate of interest (often the lending rate less the ordinary deposit account rate) is charged on an amount equal to the balance of the deposit account. The reduced interest rate can never be a negative, ie. the deposit rate used cannot exceed the loan rate used. In those cases where the deposit rate would exceed the loan rate the deposit rate actually used in the calculation must be limited to the loan rate (see Example 3, paragraphs 31 and 32). The usual lending rate of interest on loans of this type is charged on the remainder of the loan principal.
8. If an account is made up of a series of sub-accounts, some of which are used for deposits and some for loans, then the sub-accounts will be treated, for the purposes of this Ruling, as separate accounts. Consequently, a loan offset account arrangement involving such accounts will fall for consideration under the principles applying to dual accounts (paragraphs 6 and 7).
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Guys, Apologies for the delay in updating you how I went with the process of change in lender and my 1st impression with the offering from loans.com.au.
– My loan settled in Aug and the whole process was very smooth.
-I can confirm that offset account is a separate offset account and causes no change in the loan account when funds are added/removed from the offset account. I have been with ripoff MyRate before and I know they advertise as offset account but actually provide redraw (same account as loan account). This was my biggest concern earlier but I am happy I went with them. Its not a redraw but 100% offset account.
– With 6.58%, Interest rate locked to RBA, total Discharge fee of $300, I have nothing to loose.Thanks guys.
I think I know the differnece between redraw and offset, but don’t understand what an offset redraw is, and why it is potentially dangerous for an investor? The Rulings seem to indicate if the accounts are separate it’s an offset account and OK, but I’ve seen people indicate that if it’s a REDRAW, steer clear???
So I have two questions then:
– if the “100% redraw offset account” has two sub accounts, one for the Deposits and one for the Loan, and so all transactions are separate, then it would be OK from a tax perspective. so has anyone actually queried this to get confirmation with the ATO?
– if you redrew your money and refinanced and never deposited money into the loan again, would they go back through your history and say, back in 1969 you actually redrew this money and so owe 40 years of tax deductions?
cheers
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