Locking Investment Fixed with Smaller Lenders

Hi all,

Been on a pretty disappointing refinance adventure the past few months with no actual result.

Looking at fixing approximately $1m investment loans for three years at the lowest rate possible. Toying with P&I but would rather IO.

Also looking at pre approval for another $420k.

Currently with CBA wealth package on 4.94% variable with a 1.3% discount apparently? Not sure how this equates when the variable listed on their website is 5.84%.

LVR at 52%

I was in the hot seat with Virgin money at 4.14%. It fell over when they noticed I had an ABN even though the income from the business was not used in serviceability.

Frustrating.

To add another spanner in the works, a family member is my broker. I'm just wanting a second opinion on what options/path I should take.

Ideally my owner occ stays with CBA but open to moving the lot. Owner occ LVR at 20%.

What is the general opinion with smaller lenders like Virgin? Should I stick with the big banks?

I understand that serviceability will decrease if I P&I before my pre approval for $420k. Should I even consider investment P&I when I have a small owner occ loan?

Thanks

 

Without knowing a whole lot more it's really difficult to give advice - this is not just about rate but structure and planning also.

But - P&I can work for investment in the right circumstance but again, not something to rush into before getting some specific advice as it could wreck you plans if you just rush in.

 

Thanks Jess.

What is your experience outside the big banks.

My accumulation phase is nearing the pointy end. I want to acquire two more to finalise my portfolio. Servicability is a factor now due to APRA even though we are on much higher salaries and household income compared to my last purchase.

 

Using lenders outside the big 4 is pretty much necessary to keep borrowing if you don't service with the mainstream lenders anymore.

Depending on your servicing, generally I would wait until you've finished buying to change to P&I.

I understand that it's tempting to use family but if you're getting close to your limits I would strongly suggest getting specialist advice on your current set up - once you buy more you'll be stuck in place wth your current structure so now is the time to make sure it's all been done correctly as it will be too late to change anything once you buy again.

 

Virgin gets their money from bank of Queensland. And yes, they don't do self employed, even when you don't need the SE income.

How long has your broker been in the industry? What's their investment portfolio like?

 

Im not self employed thats the weird thing. They suggested I close my ABN to get over the line.

Stupid really.

Broker (+5 years experience) has refinanced for me in the past and all went well. Not sure on their portfolio.

 

An ABN is evidence that you are self employed.

 

Virgin is currently SLOW and very finnicky - they rely on cheap rates to try get people in for the most part.

For IO 4.14% is pretty sharp - you would be looking at a little higher with CBA for IO, else you would be sub 4% for P&I.

I'd suggest you weigh up your cash flow position - if you can support the additional cash flow return you'll have to ask yourself why retain IO lending when you're paying a premium which outweighs the tax benefits. It may be worth having the conversation with your accountant who will be able to explain the effective tax consequences.

 

Even if it equates to 1% of my total income?

 

yes