Sticking with a Big 4 lender or...?

Discussion in 'Loans & Mortgage Brokers' started by Athikalaka, 13th Oct, 2017.

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  1. Athikalaka

    Athikalaka Well-Known Member

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    Hi all,

    I have been looking at Investor loans but fixed P&I as I know my serviceability will be capped for a while. I have no non-deductible debt and I'm using my equity from my PPOR to provide the next IP deposit.

    I've been recommended CBA's package rates, as an example, it's 4.24% pa for a 3 year fixed P&I with $395 annual fee.
    I mentioned in another thread that Macquarie have updated their rates for upcoming Monday. The investor offset rates are 3.99% pa which is pretty nice. Other than chasing rates, what is the incentive for going for something like CBA over Macquarie? Are they more flexible when it comes to drawing out equity down the track? People talk about the features of the products but in some cases they're similar but I'm curious about the other things which isn't advertised/obvious.

    Thanks
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    CBA has a better record in times of liquidity than does macq

    If going into a fixed arrangement not an issue per se

    ta
    rolf
     
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  3. Athikalaka

    Athikalaka Well-Known Member

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    So if that's the case, should I be considering Macquarie as an alternative? The investor offset variable is pretty impressive for a bank.
     
  4. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    What is the LVR?

    If you are paying LMI, then CBA is a better choice as Macquarie have some limitations on equity top ups based on recent discussions with them.
     
  5. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Get a broker to arrange it.
     
  6. Athikalaka

    Athikalaka Well-Known Member

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    LVR would be at 70% which I believe is what the rates are based for Macquarie. Didn't think about the equity top up, will they only limit me to 70% or I can push it to 80% later?

    Already asked CBA to get processed for pre-approval and didn't want to ask too much if it's not worth the time/effort. Thought to ask here if it's something simple to answer.
     
  7. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    What's the opportunity cost of putting in the 30% deposit?

    How do you expect to get full picture / advice just speaking with someone who can only really offer you only that particular bank"s view. Did they discuss your goals and what you are trying to achieve?

    True with Macquarie you get the low rate, but what if there was opportunity to invest the 10% in other asset class - via a qualified FP.

    I don't think there is a straight forward answer without knowing the full picture.

    If low rate is the focus then all good to go ahead. But need to take a step back, and consider what else you could do with the funds even though it's higher rate.
     
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  8. Athikalaka

    Athikalaka Well-Known Member

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    Planning to get a larger property for capital growth as my others are more yield focused. I'm limited with BC so the deposit is from my LOC. Maximum deductions will still apply. That's why I am looking at P&I to focus on paying down some principal for a while so I can perform another equity top up down the track
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

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    At 70% LVR, you have minimum restrictions on your ability to move around. This gives you medium term flexibility, meaning your future lending options are adjustable as your needs change. Costs of refi'ing are next to zero with some lenders, so it may actually be prudent focussing on a shorter time horizon at this LVR & assist with what your looking to do now. E.g. if its debt pay down, a lower P&I rate may be best bet. IMO, with the sharp lower pricing available, Macq may indeed be a good option.

    Also, not relevant to your situation, but i think consumers should be expecting a lower probability of future LMI equity pulls. I.e. purchasing at 90 and expecting to release equity at this LVR again in the future. This, while ascertainable today in limited circumstances, unlikely to be the case in the future. CBA, without doing specific policy announcements on this, have tightened up a bit over the course of the last 12-18 months here. There are some that are better than others, but lending policies are not consistent over time, and this is a high risk area of lending that regulators have drawn a bit more attention to since early 2017.
     
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  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    BC in your real numbers, or a lender derived outcome ?

    ta
    rolf
     
  11. Athikalaka

    Athikalaka Well-Known Member

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    Both?
    I would need to get a tax variation to get my cash flow away from the red line (if I borrowed any higher than what I've got offered my the lender). My budgeting is good and I've left plenty of room for change in rates and life circumstances. I don't want to borrow more than my risk appetite.
    Through a few lending calculators I ended up having pretty much the same BC as my appetite, anyway.
    That being said, I was curious if CBA has a more relaxed lending BC compared to Macquarie's...
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    good clarity ..............

    logic tells me ........... borrowing 80 % if you can and holding back 10 % extra buffer in offset is typically but not always lower risk than borrowing 70 and sinking the 10 % buffer into the 70 % lend

    Seek specific credit advice

    ta

    rolf
     
    craigc and Athikalaka like this.

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