Liberty joins the majors party - with very little fanfare

Hmmm... how soon can I break out of a liberty loan?

 

I'm looking at a decent payrise in the near future...

 

Ahhh well. I guess "suck it up" might be the way to deal with it.

 

Such a shame that Liberty decided to increase their rates even their rates were already high to begin with. I hope that there may be other players in the market that can replace them very soon because it's much to be desired on their rate gouging.

For anyone with Liberty loans are any potential opportunities to negotiate rate/s or a better deal?

 

Most people are who are with Liberty are with them as a last resort, ie couldn't have gone elsewhere. Liberty knows this and should / would have no inclination to be cheap.

 

So 1-2 properties with Liberty at interest only means a 0.55% increase?

 

Having paid 18% many many moons ago and 14-15% for years before that, I'm perfectly relaxed paying long term trend 7%.

5.5% is freakin cheap by comparison.

 

Yeah, 5 is not the end of the world, but you can see some buggers will be at 10 or more when everyone else is at 6.5 or 7 %

Also seems some may not care if your LVR is a lot lower if you do a val, has any of the brokers had Liberty drop a rate if a val proves the LVR is lower ?

You expect to pay a little extra to be able to get money if your options are limited, but this loading if you have x amount of properties with others is plain opportunistic. They also now slug you hard just for an application.

 

We're in the process of doing this

 

Be interesting to know how you get on......

 

Bottom line is very simple. If you require a lender like Liberty because they use "actuals" to 80% LVR , and that enables you to continue to invest beyond the limits other lenders will allow you to, then you have to pay a premium. If you are smart, you understand this very well and are using that "extra" borrowing power to purchase cash cows only, with a plan to use the surplus cash flow to deleverage , which will allow you to eventually return to borrowing with lenders other than Liberty to further expand.

There are times in any portfolio building exercise when you simply need to pay down debt in order to keep moving forward. Investors who are ignoring the need to deleverage will only have themselves to blame when they find themselves on P&I at some point in the future, and with nowhere to refinance to because the post APRA restrictions wont allow it.

if you have plans to continue to invest, make your next purchase some form of cash cow. Consider it an insurance policy for your ability to keep your portfolio.

 

Great idea, to at least get some sort of a discount. Going to request my broker do this.

 

Is it possible that Liberty can keep increasing their rates to 8 to 9% if they wished or are they there restrictions in place? I believe in a short term pain for a long term gain and have utmost fate in my IPs.

 

Anything is possible. Thats why fixed rates are a good idea for investors now.

 

What fixed rate period would you recommend assuming one will not be selling in the next few years?

 

This is exactly what I'm asking clients going with Liberty - i.e. will you be ok if they raised their raised to 9%? Mainly due to 2 reasons:

1. You can't refinance to another lender if they do and
2. You can't hedge/fix your loans if they start jacking it up

So thread super carefully.

 

Very good tip and will heed it well. I am ok for 9% but surely they cannot have rates that are either double or more than the big 4? Starting to head towards credit card rates.