Financing for 1st Investment property

Discussion in 'Loans & Mortgage Brokers' started by JONS, 15th Oct, 2021.

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  1. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The $248 fee only applies to Macquarie's offset product, the basic product has no ongoing fees. If you are already using this product on your home, you probably don't need it on an investment property. Unless there's some exceptional circumstances, you probably only need to pay the single annual fee (I also think second annual fees can be negotiated if necessary).

    Overall a good product and good lender. They aren't currently the cheapest lender, but they are quite competitive in most cases. They have excellent service levels and they are fairly easy to deal with. On balance of these three things, Macquarie are often a lender we consider.
     
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  2. JONS

    JONS Member

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    Yes he did, but the Macquarie products were the ones he recommended overall, so I only asked about those. Lender options 2 and 3 were "Go Flexi" and FirstMac", respectively, but they didn't tick as many boxes as Macquarie while also having higher interest rates and greater 5-year comparison costs.

    Okay great, that's reassuring to hear.

    Ability to access that equity, which Macquarie appears to be good for as they also gave me the highest valuation for my PPoR.

    Thanks for this suggestion. I just spoke to my broker and I queried him about the interest only option on the investment debt (quite fortuitous timing that he called while I was writing this reply). He briefly explained the pros (lower monthly repayment allows a greater proportion of rental returns to be channelled into paying down the PPoR debt) and cons (higher interest rate, extended loan period that impacts lending affordability). On the surface it does seem that investment only on the $390K makes sense given that I would have the $290K PPoR to prioritise.

    Is transitioning from investment only to P+I a straightforward process? If I could incorporate a 3-year interest only period that then automatically transitions to P+I without me having to redo all my finances/accounts that sounds tempting. Is that the approach most property investors take?
     
    Lindsay_W likes this.
  3. JONS

    JONS Member

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    yes, of course. There would be no need for an offset account linked to the investment loan as the as the priority would be to dump all additional funds into offsets linked to the PPoR.

    Thanks for that, greatly appreciated. I gave my broker the green light to proceed with Macquarie. Now though I'm thinking I should ask him to incorporate to an interest only period on my investment debt. Perhaps 3-years. Hmmm...???
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Going from IO to P&I is simple, no need to refinance or anything.
    Going from P&I to IO requires a full serviceability assessment and application.
    So you're better off going for a longer IO period initially and switching to P&I when needed, rather than going for a shorter IO period initially then end up wanting/needing to extend it.
     
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  5. JONS

    JONS Member

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    okay, got it. So I should shoot to establish a 5-year IO period now, then if I end up having my PPoR debt paid off after 3 just years I can then easily transition the investment loan from IO to P&I at that point. Thanks, Lindsay!
     
    Lindsay_W likes this.

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