Refinance and Equity Release Questions

I am looking to Refinance my PPOR.

Currently I have 575K loan left. Assuming the valuation will be 800 K, I am also looking for approx. (80%*800K - 575 K) = 65 K Equity Release.

I am getting 3.32% (standard variable with Advantage Package) with no Fee+2K cashback from the Dragon.

Q : Is it in line with current market?


Also, I asked the banker to get Equity Release into a separate IO split.

As per what I have read through various threads in PC, My plan was to pay off the IO loan (or just keep $10 if paying off the whole split results in closing down), and then reborrow from the split when we buy an IP.

However, the Banker advised he can split, but since it is an OO loan, he cannot do IO, the split has to be P&I.

Q : How to deal with a P&I Split until I use for IP? Does the same strategy works i.e. Pay off the whole or 99.99% and then reborrow when required? How the repayment is calculated in a P&I Split?


Also, on the main loan, I have asked for multiple splits as per Tax Tip 13: Simple Loan Structuring Strategy.

The Banker informed me that each split created beforehand will result in a separate loan contract . He advised me to do splits later(P&I) as it would be easier.


Q: Is it true that each split will result in a separate loan contract?


Thanks in Advance

 

Is Westpac the same or is it different to STG?

 

1. Yes

2. A PI loan fully offset will quickly pay itself off – about 15 years

Loan Tip: If a PI loan was fully offset how soon would it be repaid?

Loan Tip: If a PI loan was fully offset how soon would it be repaid?



3. No. and even if it does it doesn’t matter really

 

very different, even though both mortgagees will be westpac

 

So which one is better?

 

That depends on the circumstances. As a broker I probably use both in equal measure. St G are good for trusts, westpac are good for individuals debt recycling. Serviceability is often better with westpac....

 

If the aim is to do some debt recycling in future via split loans etc and the rate difference betwen westpac and St george is around 0.1% (westpac higher rate) on approx $1mil loan, which one would you choose?

 

I think the rate i'm negotiating with St. George and Westpac will not be far off form the Macq rate.

Secondly will get $2k rebate for each of the 3 properties

Thirdly, will most probably get first 2 years package fee wiaved off with St. George and Westpac where as with Macq its hard. Also Macq charge $363 settlement fee per property where as St. George is $100 per property and $0 with westpac.

Fourth, STG and WBC will do 90% LVR without LMI whereas Macq. wont.

So when i did the calculations for the total cost as a package over a 2-3 year period (I generally refinance every 2-3 years), Westpac and St. George suits more than any other lender.

I dont do much active DR. But might do little bit in future.

 

Is any better than the other if the borrower is a medical proffessional?

 

Macquarie have a medico package but its not as robust as St George or Westpac.

St George by far has the superior medico policy of all the lenders (thats policy not product). They love medicos and if there are any tricky scenarios or if any exceptions are required to policy then they are quite good and take a very pragmatic approach to lending. Whereas Westpac is very black and white. ANZ is also a very medico friendly lender.

Westpac's products are excellent for debt recycling as Rolf has mentioned whereas St George is generally clunky although this is getting a bit better.

St George are also good for company/trust structures and they have a little niche whereby the title can be in the name of a company and the borrowers can be the individuals (providing the guarantee).

 

Is there much difference in the SVR product under the yearly package between these two lenders?

Also any differenece if multiple split accounts are needed or there is a need to do a split after settlement?

 

Yes very different. Westpac is very easy to split, St G harder.

 

This is something you would need to discuss with your broker as it is provision of credit advice and there are many other things to consider which you have not listed.

 

Planning to go direct through the bank

 

Well, you would be unable to get advice in that case other than from the lender you are dealing with.