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Best fixed rate?

Discussion in 'Property Finance' started by srirang, 3rd Aug, 2015.

  1. srirang

    srirang Well-Known Member

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    Hi all,

    I've got 4 IPs all coming of fixed with ANZ this week. I've had my broker working on fixing them for another 2 years at 4.39%. They've just come back and said the rate is 4.89% and isn't budging.

    Combined lend is 1.7 mil and includes 2 LoCs totaling $81k. PPoR lend is $900k and with Macqarie.

    Is this the best I can do in the current APRA situation? I'm not wedded to ANZ and happy to switch.

    My broker is working this out as well and just want a second opinion.

    Thanks in advance.
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    The problem there is that ANZ have very conservative borrowing capacity calculations so by fixing with them you may be hurting your ability to pull out any equity from existing properties and you cannot refinance to another lender as its locked.

    So factor that it in when fixing the loans with a particular lender.

    Did one this morning with St George @ 4.39% for 2 years but NAB and Firstmac are also doing 4.54%.

    Again think longer term before choosing the appropriate lender - you don't want to peak by using a generous lender like NAB or Firstmac to early in your portfolio.
     
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  3. srirang

    srirang Well-Known Member

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    Thanks for the quick response Shahin.

    Good to know about ANZ's conservative capacity calcs.

    How about ME Bank who is offering 4.28% fixed for 2 years I/O. Would you use them over St George?
     
  4. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Me Bank is ok - they are not a strong player in the variable space (they can't price on variable loans!) but since we are talking fixed rates then they do ok.

    I think you should add them to the list of lenders to consider. Their servicing calc is better than ANZ but you need to drill down at a policy level and see what lenders are going to suit you.
     
  5. sash

    sash Well-Known Member

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    On what basis are you saying that NAB and Firstmac are generous?

    With the way things are going....pulling equity out is going to get difficult.

    Not directed at you.....but am starting to ask the the question if brokers seem to have vested interests. NAB is a terrible choice not only for loans as not only is their service really bad...but they will only do 5 yrs IO and then you will need to resubmit paperwork for additional extensions of IO. I hear that Firstmac are also closing the loop...

    Are you guys actually on top of the changing loan landscape?

    Westpac is probably the easiest to deal with if you have a 20% deposit...St George is also similar....

     
  6. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Hi Sash,

    A Broker should not recommend a lender based on "who is the easiest to deal with".

    A recommendation should be based on a number of things such as but not limited to the client type (e.g. expat, non resident, company, trust, etc), policy (acceptable income, DUA, cash out policy, etc), security type (multi unit, serviced apartment, etc), product/features/rates (unlimited offset, IO terms, etc) and servicing/LVR (max LVRs, borrowing capacity limitations, etc).

    It is impossible to say one lender is better than another lender for everyone.

    Westpac has some good niches and policies for certain clients BUT Westpac (as an example) will not be the most suitable lender in certain circumstances namely due to the following restrictions:

    1. They have a hard rental reliance policy
    2. They do max LVR of 80% for IPs - they are doing everything they can do balance their book as their are heavily skewed on IP debt
    3. Non-resident policy is weak - they do max LVR 70% even for expats - whereas again as an example (I'm not implying CBA is the best), CBA will do 95% for expats.
    4. They don't do construction for more than 2 units
    5. They don't accept multiple units (more than 2) on a single title
    6. They don't allow for company/trusts applications over 80%

    I can name a lot more but the point I'm making is that its not a one size fits all approach which I'm sure you would agree.

    In terms of NAB and Firstmac - these lenders are very generous in their servicing calculations provided that you use then towards the end of your portfolio as they calculate other lenders debts generously. Firstmac and Homeloans as an example will do actual repayments and NAB does actuals plus an approx 20% loading. This is still better than other lenders which are calculating at benchmark rates of say 7.25%.

    So lets say you have a $1,000,000 loan with NAB. Lenders calculating at benchmark rates of 7.25% are going to factor your annual repayments as $72,500 whereas a lender doing actuals will factor the actual repayments say $45,000 (if the rate is 4.50%). So you lose close to $30,000 in income for every $1mil in debt. The higher the debt the more its going to hurt.

    Also re the IO period - only Westpac and St George will do 15 years without hurting servicing whereas other lenders like CBA also do 15 years IO but this will impact servicing. Again a lender recommendation shouldn't be based purely on who does the highest IO term - its just one of the elements to consider.

    Essentially what I was emphasising in my previous point was that don't choose a lender purely based on rate. NAB may have a better rate but by choosing NAB or whatever lender - you are stopping yourself from purchasing future properties.
     
  7. Kirsti327

    Kirsti327 Active Member

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    I've just applied with BoQ Specialist (available to medical and accounting professionals). Fixed at 3.99%, variable at 4.24%. 90% LVR with no LMI. I have NRAS properties and they're basing the servicability on market rent instead of actual rent which helps.
    They say due to their specialist focus APRA aren't too concerned about their investor lending, so they're gaining market share at the moment.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    They'll also x-coll you to the teeth and own you forever, so be aware of that before you get in too deep with them.
     
  9. euro73

    euro73 Well-Known Member Business Member

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    Clever girl!!! 3.99% and with $10,917 tax free NRAS dollars coming next year......? Your cash flow will be off the charts :)
     
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  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    From what I'm seeing the NAB still ranks quite well compared to most lenders. The maths behind the policies also supports this. Their IO renewal policy is hardly unique either, quite a few lenders have similar policies. Quite a few lenders that don't require full assessment are inconsistent in their application of that policy.

    That said, the NAB are hardly at the top of the list these days. My top lenders over the last 12 months definitely aren't my top lenders today, in fact I'm still not sure who my top lenders currently are.
     
  11. Kirsti327

    Kirsti327 Active Member

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    Thanks Jess, I saw your post about them last week and made sure I specifically asked about this. The consultant I've been talking to promised she could put it through without x-coll but I will definitely read the contract carefully when it comes through
     
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  12. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi All,
    I am doing Me Bank at 4.28% fixed.... also they have a 4.28% Varaible product without a offset account.

    Very popular product at the moment..
     
  13. euro73

    euro73 Well-Known Member Business Member

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    All money is still cheap - lets be honest.
     
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