So I have a loan on the PPOR - interest and principle - and it's going along fine. I did a loan split (I think it's' called) secured against the PPOR for $120k. At the time it was setup as owner occupier rate - so has a lower interest rate. Now that banks seem to have a higher rate for investor loans - if I want to take more equity from my house and secure it against my PPOR - the banks are asking what I plan to use the funds for. If it's investment they want to charge a higher interest rate. Which annoys me. I am not even planning to use the money in the short term - just let it sit and wait for the right opportunity. So - how are you managing your loan splits in this lending environment? Is anyone still getting less then 4% when they are taking equity out of their PPOR? If so - which lender are you with? Will your bank let you do loan splits at $20 or $50k at a time? Any information appreciated.
@Terry_w - I think you mean find a new lender. And this is what I was thinking - which is why I was asking about which lenders people are using that would allow this loan splitting thing that I want to do. I didn't think you were a mortgage broker Terry. I thought you were more into discretionary trusts and bucket companies?
I just did this, but the investment "equity release" was at a much higher rate. My original splits - with no increase in equity - are all at the PPOR IR (as they should be!). I hoped that the new one would be too, but alas (CBA!) When I get more time than a few minutes off, I'm calling Terry .
I refinanced for a split loan with loans.com.au and got the same rate as my PPOR (was 3.64 when I started the process) with that split loan. Its IO with an offset account. Not sure I got away with something or if it's usual practice there though.. PPOR rate increased to 3.71 and split loan followed but I negotiated to bring it down to 3.64 again. I think it's not normal practice but they gave it to me. Waiting for a few months to see if it increases as I'm refinancing an IP with a split loan with another bank (reduce loans) and they told me I'm no way getting the same rate as my IP rate for the split loan as IP is P&I and loan is IO.
Some banks will do this, others will trust you. AMP is pretty much the only lender that will let you have OO rates regardless of purpose. Firstmac possibly too I think but might have changed.
@sharon FirstMac is loans.com.au. Worth checking. i did it in the last 2 months so should be open for you as an option too. i am going to try and negotiate with reduceloans.com too but from experience so far they are tougher to negotiate with then loans.com has been. but the structure of the bank is completely different too.
