Gday all,
I'm in a bit of a pickle at the moment. Our broker has come up with 2 options for taking out a loan with CBA for our first IP.
1.
7.05% SVR, IO with offset2.
6.38 Fixed, IO with partial offsetWith the the first option it will leave us roughly $30pw worse off but we get the benefits of the offset account.
Option 2 – better CF but only a partial offset (not sure how to calculate CF with partial offset, if anyone can help?)We're not keen on going variable so that is kind of out of the question. I'm thinking that maybe putting the surplus that we would have liked to put into the offset account, into a high interest savings account. Only problem is we will lose the interest earned that month whenever we withdraw any cash out. Ideally I'd like to have all our cash working to reduce the interest bill on the loan but this is only possible at the higher rate + variable!! Any thoughts/ideas on the whole situation?
Cheers
Why go with CBA? Their offset is not fully transactional.
And, why have an offset on an investment property loan? It would be better on your home loan, assuming you have one.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Good points above.
If you have a PPOR than place an offset against it.
The MISA account only offsets a third of the fixed loan.
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]
Thanks Terry, CBA is what our broker came up with as our best option, but it was never bought to our attention that they are not fully transactional. I'll have a word to him about it on Monday. We've had an offer accepted on a place and would like to get the ball rolling on that. Hopefully this isn't going to be too much of a hassle.
And no we do not have a home loan, we are renting at the moment.
CheersThanks Jamie
I hate when people use the not fully transactional line with the CBA MISA. So you can withdraw amounts less than $500, big deal.
I have a CBA IO only with MISA and its fantastic, ay 6.96% currently.
That's true Paulie – and it's easy to get around the $500 issue with a little creativity.
You can also accept payment into the MISA. We have a MISA set-up against our PPOR – all the IP rent gets paid into the MISA.
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]
I'm definitely no property expert Grantos, maybe Terry or Richard would be better to clarify this, but rather than go 100% with SVR or fixed would it be better to split your loan 50/50 between the two?
Hi Shane
Yes your point is well made however i must admit i think i would be holding off fixing until we see which way the next RBA meeting goes and if we see a 25 or 50 bps reduction in the Cash Rate i believe Fixed rates will fall even further.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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