Macquarie $199 x2 Offset fee

Just been on the phone to them,

Ive been charged a $199 for the privilege of offset,

I ve had the account for about 5 years and first time ive been charged,

all they said was fee wont be waived and stays, you signed it, talk to your broker from 5 years ago...

I dont remember seeing the fee on the application as I would have never gone ahead with a fee to use the service , (however I probably did sign it)

is this a common fee to have, seems ludicrous to have $400 a year in fees to use the offset

 

Did you just come off a fixed rate?

 

bingo, I just came off IO late last year I think to PI.......

 

Time to refinance? Plenty of options offering free offset accounts.

 

A few things to consider here:

It is a common fee. Almost every first and second tier lender charges a similar fee for their package which includes an offset account, fee free credit card, etc. Most also have a basic product without the offset but traditionally the 'package' products have been better on rates which makes them cheaper despite the fees. Macquarie also has very competitive variable rates.

Have you had any money in the offset account? With an average annual balance of $4k in there, you're financially ahead by having an offset account and paying the fee, as opposed to no fees and putting $4k in a term deposit (I'm making the assumption that the home loan rate is about 1% more than the term deposit rate).

I can't recall what Macquarie's product offering was 5 years ago. They may not have been as competitive on their basic loan vs the offset home loan. At the time your broker may have gotten the best deal available despite the fees.

Also, you did sign the loan offer documents and every lender does mention their fee structures in their loan offer documents and they always have. Most people just never read it.


Coming of I/O is not the same as coming off a fixed rate.

 

Sounds like their 'Offset Package'. $199 is their reduced package fee (no cc). Most lenders have an offset as part of a package. So in this case, to get the benefit of their offsets accounts (10 allowed per split) you have to pay the fee. A package is a little more than just getting offsets accounts though. You generally also get a lower rate, no transactional fees/monthly fees etc.

Note: towards the end of last year, they reduced their package fee from $398 to $248. If you've had this loan for 5 years, then you would have signed up to the their old package hence the $398 fee.

 

As I said, im not denying signing it, I probably did,

I may have come off fixed about 2 years ago, but yes came off IO in the second half of last year,

I m on about 5.3% so my rate isnt very good,

I need to look at it properly, im just not happy with this fee, I have multiple accounts with mac and other banks, and the fees do all add up

one of the reasons I got into an arguent with the bank is that they are telling me there is a credit card attached to it, which Ive never received and if I go to a basica home loan product without offset there will be a credit card fee as well

 

1% of $4K is $40 - did you mean $40K?

 

Talk to your broker. Macquarie currently have a very competitive offer for investment and residential lending. You're definitely paying way too much. Odds are you're with the right lender, but a review and some simple restructuring are in order.

 

My figures were mental arithmetic, really quickly done and it's not entirely accurate. Let's work it through a bit better.

Let's assume a term deposit earns 3% and a home loan is 4% and work of a base amount of $1000. You're earning an average income which attracts a 30% tax rate.

* 3% interest earned in a term deposit is $30, which is taxable. Assuming a 32% tax rate, $1000 earns $20.40.
* 4% saved via an offset account is $40, there's no tax payable, so $1000 saves $40.

For every $1000 in an offset account, you're probably about $19 better off per annum. To extrapolate this to a $400 per annum fee, you'd need an average balance of about $19,600.

Opps, my bad. Keep in mind however that money in offset is accessible at any time, whereas a term deposit locks up your savings for a period of time. Flexibility is also worth something. If you cancel a term deposit early, you pay penalties.

Also if you don't have at least $10k stashed away for a rainy day (per property), you probably need to be thinking about your risk management strategy.


The other argument for paying a $400 annual fee as been that the packages with these fees have traditionally enjoyed substantially lower rates than the basic loans out there. This is changing at the moment but in the past I've found that with most lenders, any loan over $250k is cheaper in a package than not.

 

Hey Mr Peter.
Yeah I hear you.. I suck at maths and I'm sure your figures Are right but if it's free elsewhere.
Why not get it for free that's my philosophy

 

Do you actually need an offset account? As you've suggested, Macquarie have effectively the same loan with or without an offset account and the only real difference is the fee. Other lenders have a package with the fee and offset account, but their basic products are often more expensive.

If you've got loans with other lenders, perhaps have the offset account with that lender, and switch to Macquarie's basic loan.

Also keep in mind that on a $400k loan, a rate difference of 0.1% will cover the annual fee. Other lenders may have a similar product without fees, but may be more expensive. You've indicated you're paying 5.30% but I know that Macquarie will do a lot, lot better than that.

The loan you've got is based on their pricing a few years ago and isn't competitive by today's standards. Macquarie can now do a lot better and they are very competitive compared to other lenders.

 

yes, totally agree, I need one offset, and it seems the rates for me now seem not so great, so maybe its time to have a shop around

I do feel stooged by my current rates

 

Macquarie are competitive, you just need to know what to ask for. For example their 70% LVR P&I investment variable rate is currently 3.89%.

Pretty much every lender has better rates than what they offered 5 years ago and none of them do the courtesy of letting existing clients know.

 

I fully expect the answer to be "yes" but I am already with Macquarie, and if I wanted that lower rate, would they do an entire income check again? As though I was doing a whole loan application process?

 

Probably not. There are some circumstances where they have asked for a new application, but generally I've found they can renegotiate fairly easily as long as you're not asking for an amount increase or interest only extension.

 

sorry for jumping in into the conversation. Just want to ask can we put as much as we can into offset so we don't need to pay any interest? Will the bank be happy about this or do they have a certain rules so we still have to pay interest?

Regards,
Ben

 

I know of no lender with limits like this

 

Assuming it's a 100% offset account (which almost all are), the ratio is 1:1. If you owe $400k and there's $400k in the offset account, you won't pay any interest.

If you owe $400k and there's $100k in the offset account, you'd pay interest on the difference, which is $300k.

An offset account is essentially a savings account. There's no limit on how much can be put in there, although I believe there are limits on how much is covered by government guarantees (not a significant risk at the moment).

 

Thank you Terry and Peter much appreciated.