Macquarie for Debt Recycling

Discussion in 'Loans & Mortgage Brokers' started by Milltron, 27th Oct, 2019.

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  1. Milltron

    Milltron New Member

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    Hi All,

    I'm working to re-finance current loan and set up a debt recycling strategy and have read through lots of the forum , re using AMP Master Limit & have at least a reasonable understanding of how to set that up, but cant find much on using Macquarie which seems to also be somewhat favourable for this strategy also & with significantly lower interest rates.

    For the loan sizes I am looking at rates seem to be the below - but not 100% I am pulling this correctly.


    AMP Master Limit - AMP Professional Package Home Loan - AMP

    • PPR Comparison rate 3.54%
    • Investment loan comparison rate 4.74%
    • LOC comparison rate 5.03%

    Macquarie Bank - Personal Banking Australia | Bank with Macquarie
    • PPR Comparison rate 3.35%
    • Investment loan comparison rate 3.65%

    Is anyone using macquarie for debt recycling and could talk through how they have set it up and how they manage it on-going?

    Pros and cons of Macquarie vs AMP for debt recylcing?

    Assuming the above is correct , it would be a saving of almost 10k to use Macquarie so seems worthwhile to explore. Would love everyone's thoughts.

    Cheers
     
    Never giveup likes this.
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Get some specific tax and credit advice from licensed professionals.


    Most people are doing things wrong so you wouldn't want the blind leading the blind.
     
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  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Macquarie is a great lender in many respects, but they don't do a master limit. Constantly readjusting balances isn't as straight forward with them as it is with AMP. This doesn't mean you can't debt recycle, it's just not as convenient (which can be said of any lender).
     
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  4. Lindsay_W

    Lindsay_W Well-Known Member

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    First up, forget about comparison rates, look at the actual rates.
    AMP Master Limit is easier but not by much.
    AMP's serviceability calculator is less generous than Macquarie's
     
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  5. Milltron

    Milltron New Member

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    Thanks for your thoughts Lindsay - is that because I am effectively double counting fees by looking at comparison rates?

    Even comparing actual rates , master limit is significantly more expensive - im prepared for more effort if it means a significant saving
     
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  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Comparison rates take into account the actual rates and fees over a specific period of time for a specific amount.

    Those parameters were set over 15 years ago and today they accurately reflect the circumstances of almost nobody. Therefore the comparison rate isn't comparing the cost of the loan you'd end up with, it's likely to be completely inaccurate.

    Also the rates being compared are the advertised rates, not the rates that can be negotiated.
     
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  7. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    All comparison rates are based on a $150,000 loan . A higher loan say $1M will be less affected by fees and more affected by the actual interest rate but this isn't reflected in the official comparison rate and neither is the fact that many comparison rates are based on the published rates not the negotiated rates.
     
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  8. Lindsay_W

    Lindsay_W Well-Known Member

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    Peter and Marty have answered re: the comparison rates above, I'll add that they're typically calculated based on the full loan term (30 years/25 years), who keeps the same loan product for 30 years? Almost no-one and especially irrelevant to someone like yourself who is potentially going to pay down the non-deductible debt quickly using a debt recycle strategy.
    Slightly more effort required for Macquarie product but better overall borrowing capacity and cheaper in the long run could be more beneficial to your situation
     
    Milltron likes this.
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    What tax bracket are u in ?

    Do u have a planner to aid or are you doing DR pn DIY basis/

    AMP master limit is better than Mac limit swap for those in higher tax brackets because one can move PPOR PI debt to IO investment debt, whereas Mac only allows swap or readjustment on same repayment type, ie IO to IO or PI to PI

    ta
    rolf
     
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  10. Milltron

    Milltron New Member

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    DIY basis at this point & top tax bracket.
    Thanks for your note, makes sense - good to know!!
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Amp would fit your profile better since it's more tax effective if structured the right way

    I'm no tax guy so pls seek specific tax and credit advice.

    Ta

    Rolf
     
  12. Never giveup

    Never giveup Well-Known Member

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    Hi @Milltron ,

    Who did you choose for your DR?