Current rates on full offset PI home loans

Discussion in 'Loans & Mortgage Brokers' started by Property Baron, 5th Jan, 2020.

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  1. Property Baron

    Property Baron Well-Known Member

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    Hi there,

    Anyone have any knowledge on the current offset accounts getting around at the moment?

    A quick google search suggest there are a few offering what seem ok rates?
    There are a few uner 3%

    Any have any reasons to not use these if we could put up 25-50k a year into one?

    Cheers,
     
    Property Baron, 5th Jan, 2020
    #1
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Some lenders have very low rates but I would never use them or recommend them due to their overall service offering, policy and serviceability calcs, so really would need to know what lenders you're referring to when you ask the above

    Need a bit more info in order to compare;
    Investment or PPOR?
    LVR?
    Loan amount?
    Why P&I instead of IO?
     
    Lindsay_W, 6th Jan, 2020
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  3. Property Baron

    Property Baron Well-Known Member

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    2 with the very low advertised rates at the moment are:
    ME Bank
    State custodians.
    The scenario would be looking for a 500k home loan putting down 100k deposit and 150k into offset with intention of adding approx 4k per month into offset.
     
    Property Baron, 6th Jan, 2020
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  4. Morgs

    Morgs Well-Known Member Business Member

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    Agree with this... but otherwise would make lots of sense to have an offset account.
     
    Morgs, 6th Jan, 2020
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  5. Lindsay_W

    Lindsay_W Well-Known Member

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    I'm assuming the following;
    You meant $500K purchase price with $100K deposit therefore 80% LVR lend required,
    It's for owner occupied not investment.
    It's variable rates that you're looking at not fixed, due to wanting to offset the loan.
    State Custodians is not an ADI so the offset isn't a true offset account, more like a redraw account - not ideal.
    ME Bank is OK, rates aren't particularly special for this product mix - there are better products out there.
     
    Lindsay_W, 6th Jan, 2020
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  6. Property Baron

    Property Baron Well-Known Member

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    Yes you are correct in what I was saying.
    With State Custodians there website says 100% offset if this is not the case could you explain the differences for me?
    Also can you suggest some of these better products that I could have a look at please.
    Cheers,
     
    Property Baron, 6th Jan, 2020
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    State custodians are a mortgage manager for non ADI funds.

    this means the offset is a redraw/offset

    for tax purposes, if its a discrete dual account, thats generally fine ( though see if they have a PBR available)

    the issue with this facility for many borrowers is that the PDS for the product likely doesnt state there is no fed gov guarantee for your cash to 250 k as there is with an Approved Deposit taking institution ( ADI).

    Insurance costs money, no lexus at corolla price

    Slight omission

    ta
    rolf
     
    Rolf Latham, 12th Jan, 2020
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  8. kierank

    kierank Well-Known Member

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    I have the same question.
     
    kierank, 12th Jan, 2020
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  9. FKS

    FKS Active Member

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    What happens if you have an IO loan that's 100% offset. Do the repayments become nil till the interest only period expires?
     
    FKS, 13th Jan, 2020
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  10. Lindsay_W

    Lindsay_W Well-Known Member

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    Yes
     
    Lindsay_W, 13th Jan, 2020
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  11. Property Baron

    Property Baron Well-Known Member

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    Thanks Rolf,
    What is a discrete dual account and with a PBR?
    It does make me feel a little differently as State Custodians as you say has no insurance. Do we know of any lenders like these guys that have actually gone bust before and customers losing all there money? I guess I was thinking because some of them are owned or backed by larger financial institutions that this could not be possible.
    In saying this State Custodians has been lending money for over 30 years. That is a lot of money in insurance.
     
    Property Baron, 13th Jan, 2020
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  12. Lindsay_W

    Lindsay_W Well-Known Member

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    RHG/RAMS - clients got stuck with high interest rate loans afterwards, not sure what happened to the money in redraw.

    State Custodians ABN has not been registered for 30 years, earliest date I could see was 2006, however they are owned by Resimac, which has been lending since 1985.
     
    Lindsay_W, 14th Jan, 2020
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  13. Property Baron

    Property Baron Well-Known Member

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    Thanks for the feedback.
    Wonder what happened with Rams they must of started back up again and under same name.
     
    Property Baron, 14th Jan, 2020
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  14. Morgs

    Morgs Well-Known Member Business Member

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    They're owned by Westpac now
     
    Morgs, 14th Jan, 2020
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  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    different funding model

    I think it worked this way.

    Old Rams was lending money on shorter term 30 to 90 day rolling bonds and onlending it at 30 years.

    When refinancing/renewal of those bonds became though post GFC, they could get money, but at higher rates............ borrowers that could leave, left, and over time the quality of that book got worse, hence subsequent reissue bonds got more exxy.......and it got more that way.

    Macq old funding model for many of their old loans was similar which is why they pulled up stumps post GFC as well

    ta
    rolf
     
    Rolf Latham, 14th Jan, 2020
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