I/O SMSF Loan has expired.

Good Morning all,
Our SMSF interest only loan with St George has expired and St George no longer offer this product.
What else is out there when it comes to I/O loans for SMSF’s and what sort of interest rate should I expect ?
Cheers

 

Not many lenders left at all. Your smsf might be stuck

 

You are looking at high 5's (La Trobe) to mid 6's (Liberty)

The issue however is the cost to refinance SMSF loans - its high.

I think you should run the numbers to see if you are better off moving to P&I repayments with the dragon.

 

Hi there -

Do you know if you are in a position to service a P&I loan? Have you been contributing to the fund?

Macquarie just left but they do not do refi. La Trobe base rate is 5.99 however interest only is higher. I would not reccomend Liberty. There is a mortgage manager in the late 5's but will depend on LVR. Remember SMSF refi must be dollar for dollar.

Cheers Ivan

 

If ALP comes into power, LRBAs may be gone for good. Pick a good product on PI at lower interest rate and start hammering it down unless ofcourse there is a short term exist strategy in place.

 

Out of curiosity, why is Liberty not recommended?

 

You should be seriously considering paying P&I on SMSF lending - the aim is ( or should be ) to pay the thing off by retirement - just like a PPOR . IO is not a smart play in SMSF in a post APRA world .

 

Thanks everyone for the prompt responses.
St George is offering.....

6.67% - Variable
5.99% - 1&2 yr fixed
6.09% - 3 yr fixed
6.39% - 4&5 yr fixed

All principle and interest.

How does the Dragons rates rank against others SMSF lenders out there ?

 

Variable Rate is not great with St George
Macquarie is out of the market as of yesterday, had to have apps submitted by 30th April and must settle by 30th June.
For comparison of a couple of variable rates (P&I);
Mortgage Mart - 5.69%
Australian Financial - 5.85%
Liberty - 6.15%
La Trobe - 6.29%

No idea regarding fixed rates

 

It’s unfortunately a loan product where lenders can charge whatever they want .... In a perfect world you’d simply refinance to a much lower P&I rate but that’s only going to work if you are in a position to actually refinance . You may not be able to if you borrowed 80% from the dragon ... best you contact a broker , get some Vals done and find out what your realistic options are before making any decisions . Also remember that you have an offset with the dragon product and you likely won’t get that elsewhere now AMP are out .... Offsets are especially powerful luxuries for LRBAs because redraw from the loan is not allowed . If you intend on making extra repayments to get it paid down faster and want to retain redraw for future opportunities , an offset is the only way to do that .... so what’s that worth to you as a luxury feature ? Might end up being worthwhile paying more at the dragon to retain that .... all stuff for you to weigh up.

 

Just to clarify, there is a Mortgage Ezy product, rate is 5.69% Variable with an offset - so there's at least one alternative option

 

Good oh ... max LVR ?

 

75%

 

so there's an option.... maybe @Rivet needs to enlist your assistance

who's the funder of their product ?

 

Stay with the dragon and considering fixed rates provided you dont plan to sell the property within the fixed period.

You are going to get hammered in exit and entry fees with SMSF lending.

I would rather have the loans with St George than the remainder of the SMSF lenders out there.

Just because you can doesn't mean you should.

 

I find it interesting that you have told Rivet to stay put without running the actual numbers (apologies if you have) Would be better for them to see a broker and run actual figures to see if there is any benefit to moving or not before making such a decision, can't hurt.

 

People need to do their own due diligence and part of that is running the numbers either themselves if they are confident/know what they are doing or through a broker (perhaps he has one already).

Rivet has been given a lot of excellent/factual information on this thread in terms of the lenders and their rates.

Back to my comment about about staying put - this is really 2 fold. Firstly refinance costs for SMSF loans is expensive and none of the rates above are that fantastic to warrant a refi unless there is a product or policy requirement for the move.

Secondly, and this is the big one, I wouldn't refinance my own SMSF across to any of the above lenders and this has to do more from a risk mitigation perspective. To each is own but saving a quid (in the short term) isn't the most important thing.

People can make their own conclusions so my personal conclusion on SMSF lending is that more and more lenders have and will exit the market - those that remain or step in will gauge and gauge hard. I would seriously consider fixing for as long as possible to prevent my self from rate increases that can and will happen due to lack of competition. Fixing has serious consequences too so this isn't about everyone fixing their SMSF loans and definitely getting advice. The point is more that SMSF lending is a very different ballgame than resi or commercial lending.

 

I have to agree with this last statement about the few remaining SMSF lenders gauging hard. I was with La Trobe with a 50% LVR P&I but they started to really gauge me to 7.5%, not a good experience. I refinanced with Liberty to 5.99% but the day after I settled they increased to 6.15% with all the interest rate cuts you think they would come down but that's not the case. It looks like reduce home loans don't do refinance and the rest want large liquidity but I'm trying to pay down the loan not keep cash in an account not earning any interest? Any SMSF lender who have lower rates I'm willing to fix as I don't trust any of them anymore.

 

Funder = Origin

 

Thanks, Lindsay I hadn't heard of them before, I gave them a call, Morgage Ezy only do new purchases no refinance.