Conditional Loan on currently owned property for IP

You're right in that he probably didn't submit the pricing request. But it makes me wonder how long I've been paying a higher rate than I should have been? The end result is me paying more than I should have.

 

You could be right on both counts. The CBA guy was concerned about the ratings I give him, so I assume it affects his bonus. As for the bit about brokers getting a trail, I have no idea if that's true or not.

Does a good mortgage broker go through all of their clients loans on a regular basis and try to get them the best rates? Because it's clear mine hasn't.

 

If you are borrowing more money this is the time to ask for further discounts. It doesn't necessarily mean you were paying too much before.

 

Morgan Stanley recently released a report for the Productivity Commission (so independent of both bank and broker groups) that indicated that brokers commissions cost lenders about one third that the branch networks cost. Brokers trail does not increase the interest rate borrowers pay.

The CBA has a restriction that they only negotiate rates for existing customers one every year (could be every six months?) If you're about to make another purchase and fund it through the CBA, it might be advantageous not to negotiate now, but wait until the next loan is being set up.

 

The rate is 100% the same as long as all avenue have been exhausted - which isn't always the case if you have lazy banker or broker. There are rare case if you push above the normal channels you can get sign off for a higher rate. But doesn't always happen and need to know the right people and have good enough reason to ask them.

No problem doing the pricing now for the fund and again with the purchase. That policy only applies if you're solely pricing existing debt. No problem pricing existing debt again when combined with new debt/purchase (ideally new borrowing >$100k from my experience)

 

haha

Yes definitely meant higher discount. Lower rate.

 

@SoroSoro
CBA currently offers a 2yr fixed rate of 3.79% (PPoR, P&I) - I'm going to sign up for that, unless you guys tell me I'm crazy. The comparison rate is in the 5% range, but I don't know why, as there are no admin/setup/transfer fees. My payments go down and I end up paying slightly more principle per month.
It's a good deal - might be able to get another 0.05% off this - I have been recently.
The $60k would then be a variable loan with an offset that can sit there for up to a year as IO (at ~5%). I can use that to secure a house of up to $600k. If I don't want to buy a house, they either rewrite the loan or I give the $60k back. Doesn't appear to be any fees attached (except late payments, overdrafts, etc). This is weird. Once a loan is written there's not timeline unless it's literally got a 1 yr loan term.

I did confirm that this would be cross-collatoralised. He told me that there is no other option but to do this. I could use some advice here. This is incorrect, there's definitely other options.

So my options for the PPoR are:

• Stay as is (4.2%)
• Take the first offer (3.95%, which goes down to 3.85% if I buy an IP)
• Fix the loan for 2 years (3.79%)

Then I can also sign a loan for $60k to secure a house, which could eventually be rewritten into a larger loan for an IP. I don't know how this affects my LMI (paid @ 88% on current house) and how much more I'd have to pay. Your LMI will be much higher than necessary due to the x-coll on the two loans. Please speak to a good broker or Brady to sort this out properly for you!

It appears they require the loans to be crossed as I have no other collateral - he did admit this can make things messy if you go to sell one of the properties. I assume it also makes it a huge PITA if I want to switch lenders. You really don't have to do this. He's wrong. it may be the case that he knows no other way, but that doesn't mean another way doesn't exist.

 

Yes, they should be.

 

I don’t want to give excuses for any lazy brokers, or bankers out there, but...

When you approached your broker initially, was it just to review the rate? You didn’t explain that you wanted more/new loans as well?

If this is the case the broker could have done a pricing and very well could have been told there were no further discounts available. This is quite normal. Further if you told the banker you wanted further loan, their pricing request would be for a bigger loan total, so they got a bigger discount.

It’s also just a matter of when you ask. Each bank’s pricing teams have different aims at diferent times, get more business, slow down on investment business etc etc. so it could have been just that.

No excuses of course, just elaborating on why you have this result.