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Best bank and broker Sydney

Discussion in 'Property Finance' started by speakerscreen, 15th Oct, 2016.

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  1. speakerscreen

    speakerscreen Member

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    Hi

    I was hoping to get some advice from brokers in the Sydney region on what is the best options on the situation below for a friend who has asked my advice and looking for a broker to speak to. This is all investment related for an investment property that they are not looking to change to owner occupier.

    1. Basically my friend purchased a property in Sydney in April 2013 for 820k.

    2. He took out a 700k loan split 300k fixed at the time for two years at 4.99 percent (now variable at 4.37 percent) and 400k fixed for five years at 5.69 which is still fixed now.

    3. Currently situation is that the property is worth approx 1.4m. The 400k loan is still fixed at 5.69 percent with 18 months left with a balance of 345k after taking into account that there is 30k in the redraw. The variable loan has 268k owing but they have 270k sitting in a mortgage offset account so they aren't paying any interest on that mortgage.

    4. In addition, they have 150k sitting in a savings account as they cannot put this on the fixed as Westpac allows a max of 30k to be put into redraw. The 150k is generating some nominal interest of like 1.5 percent or something.

    5. Westpac have quoted a 10,500k break fee for the fixed. Sounds high but the interest they would be saving on being able to use the 150k savings on the fixed mortgage should it change to variable plus the reduction they would receive on the interest rate to something in the high 3s low 4s woul mean they are probably up 3k to 4k if they break. Also they are looking to pay the mortgage off quickly with surplus income.

    5. LVR on the property would be below 50 percent now.

    They have asked:

    - whether they should break and if they do would the new bank give some sort of incentive to move such as $1500 cash back
    -if they break which bank should they go to and what rate could they get. They know rate is not everything. They also use a credit card for daily purchase and pay off the card before the 45 period and earn points Amex etc. In terms of future property purchases they may look at something in the next 1 or 2 years although this depends on market conditions
    -a good Sydney Broker who could assist with there needs going forward.


    Hope this assists. Thanks
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The fact that they would be ahead is financially if they break the fixed rate is probably because there is also a large amount of variable money which could also be cheaper.

    This leads me to think that if your friend were to simply negotiate with Westpac on the variable loan, they'd probably get a more optimal deal than if they break the fixed rate.

    Tell them to call Westpac, ask for a discount on the variable rate loan. There's nothing stopping them from paying this off as quickly as they can.

    When the fixed rate loan expires, they should then review everything.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Do they have to be a Syd based broker?

    Pete's given some good advice above and is a finance guru. If your mate is ok with email/phone then Pete would do an awesome job.

    Cheers

    Jamie
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    II may have missed something but from my understanding they've got $150k to pay their fixed rate down further/offset it which is why they'll be saving.

    There are some lenders offering cash back as well- this is usually enough up cover the refi cost plus a bit of bonus change. Both CBA and Nab are offering this at the moment - St G are too but not for WBC loans.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sounds like an easy decision to me. Just calculate the cost v the savings and see how long it will take to breakeven. Consider

    - Break cost is deductible in the year incurred (based on info given).
    - They could even borrow to pay the break costs.

    - They will save interest on the interest rate

    - They will save interest on storing the $150k in the offset account.
     
  6. speakerscreen

    speakerscreen Member

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    Correct

    The variable is fulling being offset so no use getting a cheaper rate.

    They also have an extra 150k which is sitting in a savings account as (i) the variable is already fully offset and (2) they cannot put anything more into the fixed.

    Does this help?
     
    Jess Peletier likes this.
  7. speakerscreen

    speakerscreen Member

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    Also what rate should they be looking for if they went with say cba or another bank someone would recommend?
     
  8. euro73

    euro73 Well-Known Member Business Member

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    This is a commercial forum. Have your friend contact one of the brokers who have posted and let them be paid for their efforts. It will cost your friend nothing. Save them plenty.
     
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  9. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Depends on loan amount and LVR - if a $700k loan and it is an IP you'd be looking low 4s with CBA generally but could fix in the 3's.