Loan from mortgage broker – is this a good deal?

He/she would be in a better position to advise you of the best product best he/she would have asked numerous question to clarify your needs.

That aside, im not a big fan of this deal because you are pulled in by the credit card at home loan rates but you are forking out a higher interest for the life of the loan and it would cost you more than $1,000 to move. If you do the numbers it actually isn't a very good deal.

Also why are you fixing for one year and also why are you fixing for 4.99% (that is not a particuarly good rate)?

Also your employment is not of concern – you are on a great income which is great becuase one of the many things that lenders "credit score" on is servicing.

HI,

There are various products in the market place which can become confusing. As noted in previous posts, the Broker should have completed a Client Assessment to understand your needs and what you are trying to achieve. For a Mortgage Broker to advise you to fix, I believe is stepping over the boundaries of their advise that they can give. Only you can really decide to Fix or keep Variable, always remember if you need to sell the property because your circumstances have changed, with Fixed Rates there will be exit costs which could run in to the tens of thousands, dependent on time and interest rates

Looking at your description of the facility, it looks similar to a Hpmeloans offer. If it is Homeloans and the product that I think it is, there is an Offset (on the Term Loan) and a Line of Credit, as well as a Secured Visa Card at the Line of Credit loan rate. (Across all lenders a Line of Credit is always charged at a higher interest rate than a standard loan), 

The term loan should be at at around 10 basis points less (0.10%) than the Line of Credit. 

The loan product is ideally suited for high income earners with lower deposits, so the lending can actually exceed 100% Loan to Value Ratio when the Secured Visa Card is taken into consideration. (not included in the LVR calculation) The lender will allow you to use the Secured Credit Card for the likes of Payment of Loan Application Fees, Payment of Stamp Duty, Payment of Solicitor Costs, any loan fees or purchase costs.

Something I want for you to note moving forward, beware Lines of Credit that start as a Personal Debt on your Principle Place of Residence (PPR), and in the future turns into Investment Debt when you decide to make the property an Investment Property. At the time of this transition, I strongly recommend that you note the balance of all loans and discuss with your Accountant your cash flow scenario, as you do not want to ever mix Personal and Investment Transactions in a Line of Credit, the ATO do not like it and you may find that you turn Investment Debt into Personal Debt when it is an Investment Property by doing so.

In the above scenario I would look at maximizing the offset with my cash flow, and in the future looking at any savings/cash in the offset to move into further property transactions, and leave the Line of Credit as is.

Please note that I am neutral with the loan product offered, as it does come down to the client and their personal circumstances.

We assist a lot of clients in forming a Strategy, and this should always be considered very early in the process, usually before finalizing a loan structure to make sure that you will achieve what you want to achieve in the future.

I hope this is not confusing, but if so, please do not hesitate to ask any questions.

Regards Grant

Hi. 

Could someone please let me know which lenders offer a visa with 20K limit to cover for purchase costs, yet the limit is not included in the LVR calculation? And what the criteria would be? Is genuine savings is required and spread over what period? Thanks.

Regards,

Jenny111 

Adelaide bank possibly. $20k visa card in addition to the property loan. Can’t be used before settlement.

Hi Jenny111,

Homeloans is the lender that offers this loan package. Following is an example, (Please note that the interest rates may differ at anytime and the following is simply an example)

$400k Purchase

Term Loan with 100% Offset @5.79%pa

$360k (included in LVR: Max 95% ($12k LMI not included in LVR)

Plus

Line of Credit @5.89%

$20k (included in LVR: Max 95%)

Plus

Secured Visa Card SVC @5.89%

$20k not included in LVR. 

= Total Borrowing $412k

The SVC can be used for the following purposes: Payment of Loan Application Fees, Payment of Stamp Duty, Payment of Solicitor Costs and any Loan Fee or Purchase cost.

The SVC CANNOT be used for: Deposit, to consolidate debt or refinance any part of existing debt.

Other points to note about the SVC:

Drawn down at settlement and the card is then sent out and received approximately 2 weeks later,

Minimum limit $500, maximum limit $20,000,

SVC credit limit included in servicing at 3% of limit, but NO LVR calculation,

Up to 55 days Interest Free,

The LOC must remain open for the SVC to operate, as these two accounts are linked.

Regards Grant

Hi Shahin,

I agree, every persons circumstances are different and a full understanding of clients needs and personal circumstance should be taken by a broker before any product comparisons are presented.

Regards Grant

Higher rate and some restrictive policies – one that comes to mind with Adelaide is cashouts at high LVRs are a nightmare…and I don't think they're even possible above 85%

Cheers

Jamie

Hi Jenny – Jaime pretty much summed up well. Lender policy is a big big book so it is circumstantial but since LMI is not portable you need to ensure that the lender chosen at a 95% lend is the right one as it could prove expensive moving lenders and paying LMI again.