AMP investor loan 3.85%

AMP is offering 3.85% variable for IO, Offset, Investor (provided that you also have a owner-occupied loan with them). This sounds like the perfect rate for typical investors.

Anyone has experience with them? I find it odd that they charge the same rate for both investor and owner occupied loans though, no other banks do this?

I am thinking of switching my 2m+ loan to them. My current rate is 4.03%.

 

I think that may be only if the main residence is held as security for the investment property. In most cases this would be cross collateralising.

The investment loan rate is around 4.14% otherwise - still a good rate.

 

Thanks. I dont know what is cross collateralising, but doesn't sound like a bad thing right?

4.14% is no good for me, because i am currently on 4.03%. I would only be interested in switching if its 3.85%.

 

@Peter_Tersteeg did a really good writeup on this on the forums once upon a time though I cannot find the link. However I note that he's done one here:

Property 101: Cross-collateral loans

 

Terry is right. The only way to get 3.85% with an investment loan with AMP at the moment is if you offer your owner occupied property as colateral on the investment loan. Thus the term 'cross collaterisation'. Meaning that 2 securities are held against one loan.

Generally not a good idea for many reasons.

I think this is the thread @JacM is referring to by Peter.

www.propertychat.com.au/community/threads/cross-collateralisation-10-reasons-to-avoid.153/

 

I am opposed to crossing securities (and cross dressing) in most situations but I think it is worth considering in some instances due to the savings.

On $1mil worth of investment loans that is $2,900 per year in savings potentially. if those funds could be diverted into the home loan non-deductible portion to speed up paying this off. This can save tax and help serviceability.

Getting the lower rate on the investment loans will also help serviceability.

But you would only want to consider this if your financial position is strong and you are years away from retirement.

If coming up to retirement it could be dangerous as if you sell a property the lender will take the proceeds of a sale and pay down your loans - and not give you any of it!

 

With AMP it doesn't need to be crossed to get the OO rates for investors.

With $2M in lending your servicing will need to be pretty strong though, AMP are not the most generous.

 

I did a loan for a client who had plenty of equity in his main residence. What we did was set up a new split on that and paid down his investment property loans. This way he got the owner occupied rate on the investment without needing to cross coll.

 

On a $2M loan a 20 point difference in rate is going to add up to a decent amount, about $4k per year. That said, I would not recommend cross collateralising just for that reason, I don't think the benefit is worth the cost.

If you're paying 4.03% for a properly structured stand alone investment loan right now, you've got a very good deal.

 

Thanks everyone. I will find out if this deal is cross collat before I proceed.

Yes, my current 4.03% is stand alone investment with STG.

 

It is definitely cross collateralised. AMP has built a marketing campaign to brokers that they can do investment loans at owner occupier rates if the loans is crossed with a PPOR. If not, 4.14% is their best offer (which is still very good, but you've already got better).

Worth keeping in mind that AMP can be restrictive in other ways. Their servicing model is quite restrictive towards investors. STG is definitely better which might effect future equity releases.

 

Have you recently done a AMP deal with seperate securities and achieved OO rates? I ran a scenario by my bdm recently and he advised that they had to be crossed to get the OO rate.

 

I've done it - see my example above.

 

We use this product quite a bit in the office for PPOR's - especially when releasing equity for IPs etc. The overall product is reasonable + rate is sharp so it plays well. The whole rate for IP securities has been marketed internally by AMP under the proviso that they cross collateralise your PPOR with the IP security - which can get ugly.

As per the 4.14% rate, take note they've increasing the rate for new customers applying so it's no longer as sharp (whilst still reasonable compared to most Big 4 alternative).

 

OK, so i just found out that even my existing loan with STG (4.03%) has been Cross-collateralised.

Guess i can't get any worse if i go AMP at a lower rate of 3.85%!

Only remaining worry I have is in relation to the rate. AMP is very clear in their website that investment loan is 4.14% - not 3.85%. Is this a "loophole" that they will someday "fix" even for cross collaterisation loans? Because if they do, then i will be worse off than my current 4.03%...

 

@world2160,

AMP's advertised rate is not necessarily the same as they rate a broker can negotiate when they request a pricing discount (which can be done and confirmed in writing before the loan is lodged).

I've done a few deals like this recently and picked up 3.85% on every one over $750k and 3.89% on every one under. This has been at their discretion. None have been crossed. Some have been PPOR. Some have been investment.

 

This is just in:
"AMP Bank today increases rates on variable interest rates for new residential investment loans. The rate change does not apply to variable interest rates for owner occupied loans or existing investment customers. There's no change to fixed rates."...

Borrowers hit by new round of mortgage rate rises

Borrowers hit by new round of mortgage rate rises

 

This is just in:
"AMP Bank today increases rates on variable interest rates for new residential investment loans. The rate change does not apply to variable interest rates for owner occupied loans or existing investment customers. There's no change to fixed rates."...

Borrowers hit by new round of mortgage rate rises

Borrowers hit by new round of mortgage rate rises

OK, does this affect the 3.85% deal, as I am right in the middle of refinancing. I mean even if they put it up 0.2%, I am still better off as I was paying 4.52% with BW

 

The 3.85% rate remains unaffected.

 

Is there a way of knowing whether an offered loan is cross collateralised? NAB are offering 3.98% fixed for 2 years P&I as an investment loan which seems very reasonable - how can I verify whether or not they will cross collaterise my existing property?