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Switching home loans (AMP to ???)

Discussion in 'Property Finance' started by rooster123, 19th Sep, 2015.

  1. rooster123

    rooster123 Active Member

    Joined:
    3rd Sep, 2015
    Posts:
    34
    Location:
    Sydney
    Good Morning Guys,

    Looking at the current interest rates around, I believe our AMP's current rates are bit high. So we decided to make a switch to other bank/lender who can provide us cheapest rate and 100% offset account.

    Current rates which we are paying to AMP (with 100% offset account):
    Fixed : 4.99% // appro $440k (Principal & Interest) // 3yrs out of which 1.5yr completed
    Variable : 4.55% // appro $180k (Interest Only)


    So I spoke with the AMP guy who has reviewed our case and is giving us new rates as below :
    Fixed : 4.25% ( but I will have to pay penalty upfront of appro $5000)
    Variable : 4.10%

    However, looking at web, I noticed there are better options eg ING Direct offering 3.99% on variable and NAB 4.39% on fixed (both 100% offset) and there could be many more better options.

    Appreciate your inputs here to help us in deciding which homeloan to choose in this switch.

    Stells and Mark
     
  2. DanW

    DanW Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    400
    Location:
    Sydney
    Why are you refinancing? To get extra equity out? Or just for lower rate?

    Seems a waste of a hit on your credit file if it's only for better rate.

    If you look at your $5k break cost - calculate your interest savings from the refi. You are worse off to refi. It's not worth it. Why not wait until you need to and when the fixed rate ends?
     
    Kael likes this.
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,159
    Location:
    Gold Coast
    Depends on why you ended up with amp

    If it's pre Apra servicing you might find it tough

    Ta

    Rolf
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,140
    Location:
    Canberra and Sydney
    Personally - I wouldn't bother refinancing if the decision is rate based and the difference is 11 bps.

    There's costs/time/effort involved in refinancing.

    Cheers

    Jamie
     
    JacM likes this.
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,091
    Location:
    Melbourne, Nationwide
    The break cost benefit is about neutral to break the fixed rate if it's going to cost $5000. The money saved would be roughly about the same over 1.5 years. I suspect the person you spoke to is just the front line sales (the numbers are too neat), it would be worth verifying this figure by asking for a formal payout figure.

    AMP has never really been a lender that was front of mind. There was always very specific reasons why someone went with AMP. There's a very high probability that qualifying for an alternate loan might be very difficult. Also as Jamie points out, there's costs involved in moving and they're almost certainly greater than a 0.11% rate difference.

    For owner occupiers AMP has some pretty good deals. You're almost certainly better off to worth with them rather than going elsewhere.
     
  6. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    Sydney
    You also need to consider that AMP still lends for INV purposes at the same discounted rates they offer for P&I, as long as the security is Owner Occupied. ( they are NOT open for any new business where an INV security is being used)
    They also have no cash out restrictions to 85% and the Master Limit flexibility can be very handy for investors. I/O is available for 10 years.
    Yes, there are many really low offers at the moment for P&I debt, ING for example - but while you may end up with a good deal on the non deductible P&I portion, all lenders except AMP are charging a premium for the I/O portion. AMP do not discriminate as long as the security is Owner Occupied.
    Combined with a waiver of all establishment fees and a cashback offer for deals you refinance to them, investors with significant equity in their PPOR and who want to use that equity without constraint should take a closer look at AMP.