HomeStar Finance anyone?

Discussion in 'Loans & Mortgage Brokers' started by Chris21, 15th Jul, 2021.

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  1. Chris21

    Chris21 Well-Known Member

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    I am looking to refinance and leverage equity to buy investment property/share etc. I spoke with a Home lending specialist from an unheard player called - Homestar finance.

    Homestar Finance – Great Rates. Great Service.

    1. One of the lowest rate in the market - 2.14% OO PI Variable & 1.99 INV PI Fixed

    2. Allow leveraging equity to fund investment in resi and comm. property ( contract of sale required) and stocks (financial planner / accountant statement required). No construction loan or land purchase though

    3. Allow multiple splits with simple loan variation to support debt recycling.

    Too good to be true? Anyone existing customer in this forum?

    Cheers,
    Chris
     
    Chris21, 15th Jul, 2021
    #1
    Never giveup likes this.
  2. Trainee

    Trainee Well-Known Member

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    The thing that you cant tell, which is important if you are refinancing to buy more assets: serviceability calcs.

    Would go with a broker who can look at multiple loans and experienced with dealing with investors, not a ‘specialist’ that only has one source product.
     
    Trainee, 15th Jul, 2021
    #2
  3. Chris21

    Chris21 Well-Known Member

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    Not sure what you mean.

    They are lending 80% of the my OO house's market value. My serviceability is quite good and 80% is the house market value is half way my current serviceability.

    Do you mean my future serviceability will reduce because of using smaller lender for OO home refi?
     
    Chris21, 15th Jul, 2021
    #3
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    According to who, please?
     
    Lindsay_W, 16th Jul, 2021
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  5. Never giveup

    Never giveup Well-Known Member

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    Do they allow equity pull if someone wants to invest in property overseas?
     
    Never giveup, 16th Jul, 2021
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  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I don't know their policies specifically, but based on the COS requirement for equtiy releases, I'd say that getting cash out for overseas investment will be near impossible.
     
    Peter_Tersteeg, 16th Jul, 2021
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  7. Lindsay_W

    Lindsay_W Well-Known Member

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    You need a lender that allows cash out without needing to provide evidence of purpose.
    There are a few lenders that allow this.
     
    Lindsay_W, 16th Jul, 2021
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  8. Never giveup

    Never giveup Well-Known Member

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    Thank you @Lindsay_W

    I do remember some asks for SOA from FA..
     
    Never giveup, 16th Jul, 2021
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  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    If you need a Landcruiser with 8 seats, a yaris wont do, even though the sales person will swear they both have 4 wheels and an engine

    Focus on rate primarily , if one is looking to build a portfolio will hold one back significantly.

    After 21 years of doing this work I have yet to meet anyone that has built an extended portfolio with lowest cost lenders.

    Of course if you have tonnes of income and lots of equity it may be more likely

    Loans Aint Loans

    ta
    rolf
     
    Rolf Latham, 16th Jul, 2021
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  10. mkbonline

    mkbonline Well-Known Member

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    That’s a great point! Which lenders allow no question asked equity release and what is the limit in terms of $ ? Probably only Macquarie up to $1mil?
     
    mkbonline, 16th Jul, 2021
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  11. Chris21

    Chris21 Well-Known Member

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    I am not looking to invest overseas.
     
    Chris21, 16th Jul, 2021
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  12. Chris21

    Chris21 Well-Known Member

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    I hear what you mean but they allow debt recycling and equity cash out. Allow use of equity fund for investment in shares and property. What other features you will look for building portfolio?
     
    Chris21, 16th Jul, 2021
    #12
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Master Limit if one uses the loan for a PPOR
    Ability to Limit Swap from OO PI to Owner Occ IO
    Upfront Vals to extract max equity when doing revals - this is usually where the cheapies fall off the wagon, since they will rarely rely on AVMs, and thats where much of the equity is manufactured in the earlier part of the acquistion process
    No inhouse LMI approval ( im assuming)
    Rate Creep - I dont have any evidence of same - but not uncommon with many lenders

    Hey its your financial future, so you need to work out what suits you.

    If you do a search on Homestar on this Group, you will see lots of people have talked about them, and you will see the same trend in discussion, so Im a surprised no one has popped upo and said hey look I have 6 IPS worth 4 million all with Homestar......or another low rate online lender, or even a mix of online only lenders

    BTW, im not picking on Homestar per se, most low rate lenders have low rates for a reason. They will argue that they dont pay broker comms, and they run a skinny team with no branches and can rely on low margins.

    Might be a good starting point if you are inclined to focus on rate but its very unlikely a portfolio builder will stay with Homestar as they build.

    We actually use some of their funding sources loans for specialist stuff like NDIS, Alt Docs, and specialist SMSF

    Ta

    rolf
     
    Rolf Latham, 17th Jul, 2021
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  14. Chris21

    Chris21 Well-Known Member

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    Excellent points !!

    I researched a bit on Master limit concept. Not many lenders support it - AMP and Macquarie Bank are popular ones but their rates are not as competitive as Homestar Finance.

    What is the disadvantage of creating debt recycling splits via Loan Variation (HomeStar Finance small fee) compared master limit (one off $399 + $299 for master limit setup and LOC of $10k with AMP) ? Why and when would you need to change split types from OO IO to OO PI or INV IO to INV PI?

    Automated Valuation to extract maximum equity is another very good point. I have to compare valuations cost of HomeStar and someone like AMP / Macquarie.

    Any other lender which has MasterLimit and AVM ?

    Thanks for your help so far !
     
    Chris21, 18th Jul, 2021
    #14
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    What is the disadvantage of creating debt recycling splits via Loan Variation (HomeStar Finance small fee) compared master limit (one off $399 + $299 for master limit setup and LOC of $10k with AMP) ?

    How many splits does HomeStar offer,and what is their min split ? An aggressive DR strategy for the right borrower will mean 3 monthly limit rebalances. The Process you describe is what we use when we have a borrower that is stuck with say CBA or WBC due to val or policy considerations, and its messy.

    Why and when would you need to change split types from OO IO to OO PI or INV IO to INV PI


    Neither of those are common, nor an issue with most lenders. Whats unique with AMPs ML is that you can go from OO PI to INV IO. Not suitable for everyone and needs to be modelled case by case, but what it means is that you are paying IO on the new investment debt, vs PI. Thus may have 2 benefits

    1. You can use the extra cashflow to repay the remaininig OO PI debt more quickly, AND
    2. Purchase mor equities more quickly thus accelerating your Non Deductible Debt reduction, and building and broadening your asset base more quickly.    ​

    Automated Valuation to extract maximum equity is another very good point. I have to compare valuations cost of HomeStar and someone like AMP / Macquarie.

    Its NEVER about cost. Its where the best val is, simple as that. If lender X has a val that is 50 k higher than your existing you move - subject to an 80 % lend . 50 k geared at 80 % lvr gets you 250 k ( + costs) closer to the next IP.

    This little piece of the puzzle makes the "over optimisation" of lender rate and fees cost close to irrelevant.

    Much comes down to what the borrowers resources are now and in the middling future, in terms of income and income growth, equity and likely equity growth, risk profile and importantly, capacity to make a decison based on the real data that is relevant to the GOAL, versus distractions such as rate cost.

    Once again, I have not seen anyone with a stretched portfolio thats been built with a focus on rate, over any sustainable time.

    ta
    rolf
     
    Rolf Latham, 18th Jul, 2021
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    Lindsay_W likes this.
  16. Redwing

    Redwing Well-Known Member

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    Looks like they have the below features

    Visa Debit
    No Monthly or Ongoing Account Fees
    Unrestricted Extra Repayments (Fixed Rates $20k p/a max)
    Offset Facility and Loan Splits

    1.79% Interest rate
    1.84% Comparison Rate

    upload_2021-7-19_12-29-29.png

    I'm wondering for those looking at the lower rates for owner-occupied is the plan to smash the loan down as quick as possible, and then later if requiring flexibility to build your portfolio due to hurdles outlined above, transfer to one of the standard providers

    If you only have your PPoR these loan providers may be worthy also?
     
    Redwing, 19th Jul, 2021
    #16
  17. Redwing

    Redwing Well-Known Member

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    UBank has a 3-year fixed rate of 1.85% (2.24% Comparison Rate) for Owner Occupiers up to 80% LVR

    No ongoing fees $395 rate lock waived

    upload_2021-7-19_12-40-9.png

    upload_2021-7-19_12-40-18.png
     
    Redwing, 19th Jul, 2021
    #17
  18. Redwing

    Redwing Well-Known Member

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    I see also that Athena has rates “from” 1.99% variable and comparison also (<60%)
    • Zero application fees
    • Zero ongoing fees
    • Zero exit fees
    upload_2021-7-19_12-40-53.png
     
    Redwing, 19th Jul, 2021
    #18
  19. Redwing

    Redwing Well-Known Member

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    I'd not heard of Nano, but they have

    Variable and Comparison Rate of 1.99%

    Offset Account
    No Fees
    Redraw
    Additional Repayments
    LVR 75%

    upload_2021-7-19_13-0-27.png
     
    Redwing, 19th Jul, 2021
    #19
  20. Redwing

    Redwing Well-Known Member

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    Loans.Com.AU

    I have heard of and know of someone who has their PPoR and a couple of IP's with them

    upload_2021-7-19_13-2-26.png

    $520 upfront fee
    No ongoing annualised fee
    Offset Account
    Redraw
    Additional Repayments
    LVR 90%
     
    Redwing, 19th Jul, 2021
    #20
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