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Thoughts on financial situation.

Discussion in 'Property Finance' started by Krisko, 22nd Feb, 2016.

  1. Krisko

    Krisko Member

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    Hi all I was wondering what your opinions were on this finance option given my current situation .

    A bit of back info I have 1 IP and my PPOR which I am currently living in. They are financed as follows

    PPOR value 600k with the following 2 loans from Newcastle Permanent.

    PPOR 307k
    IP1 50k

    Second IP loan with ANZ 307k

    Currently my interest rate for both are not too great at the moment
    Newcastle 4.29%
    ANZ 4.87%

    The main issue I am facing now is a potential redundancy later this year so any further IP purchases have been put on hold for the time being. If I am made redundant I will travel and work overseas for the next few years, whilst renting out my PPOR (should cover all costs).

    My main thought now was too refinance with lenders that are offering a much lower rate then I am currently paying knowing full well that they may not be the best for equity releases for further IP investment.

    My thinking is if I come back and secure a job that would allow me to invest again I would refinance again with a lender that has more room grow in property investing.

    Given my current situation is there anything I havent thought of or need to consider before making the switch?

    If I was able to secure the loans I have been looking at I could potentially save thousands per year in interest payments.

    Thanks
     
  2. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    Mortgage discharge fees normally aren't too bad (my last one was $300) but some brokers have you sign an agreement to pay them $X if you refinance/pay out the loan within a specified period to protect their income (which is fair). There are also duties payable when the mortgage settles.
     
  3. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    To be honest, one of the best lenders now for building an investment portfolio with has relatively competitive interest rates, will pay rebates on refinances which will be far in excess of any discharge fees and you won't need to move again when you return.

    If you can have your cake and eat it - why not? Dependent on whether you're willing to take on a fixed rate, you could be looking at ~3.99% for the owner occ, 4.19% for the IP.
     
  4. Krisko

    Krisko Member

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    Thats a good point to consider. I dont recall signing refinance payout period but for what its worth the loans were done in 2012.

    Also an interesting point to consider.

    Who is the lender? Another thing is I would definitely need an offset attached due to the redundancy payout I would have between 200-230k in cash. From what I have seen most fixed rates dont allow the offset option.
     
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  5. Redom

    Redom Mortgage Broker Business Member

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    CBA.
     
  6. Redom

    Redom Mortgage Broker Business Member

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    Yes you won't be able to offset the fixed part - can do a split if you want to mix variable/fixed.

    Variable rate is also 4.37% for IP, ~4.10-4.25% for PPOR.
     
  7. Krisko

    Krisko Member

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    Would it be advisable to have all loans with the CBA? From what I understand it was preferable to not have all your loans with the same lender.
     
  8. albanga

    albanga Well-Known Member

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    No issue having 2 loans with the same lender if not crossed.
    May just be a problem with larger portfolios where you hit a servicing wall.
     
  9. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    NSW is the only State that still has mortgage duty, but there is an exemption for residential property where the borrower is a human so it's application is limited. It is schedule to be completely abolished from 1 July 2016 (although, this date has been deferred previously).
     
  10. Krisko

    Krisko Member

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    I have never refinanced a property before even if a loan is advertised as no upfront fees what are some the charges it would attract.
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you were to go with CBA the $1500 should cover any fees payable. But, discharge fees can be around $350, application/legal/settlement/government fees can all add up depending which lender you're going with. Smaller lenders tend to be more expensive upfront, and some of the super cheap rates have ridiculously high upfront fees so if you're rate chasing watch out for that.
     
  12. Krisko

    Krisko Member

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    Would what the CBA are offering the best deal from the big 4.
     
  13. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Undoubtedly.
     
  14. Krisko

    Krisko Member

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    You were right the upfront fees on the smaller lenders are quite high and something to look out for.

    Are the rates for the CBA quoted in this thread only available through a broker because on their website there is nothing remotely close to what is stated here.
     
  15. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    The 1.5% off the SVR is only through certain brokers, not in branch. All of these rates are negotiated, not advertised so it's dependent to a degree on who you speak to.
     
  16. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Only certain brokers who write what's seen as 'exceptional' amounts have been given the discretion until the end of the month - branchies can't even compete near it.
     
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  17. Krisko

    Krisko Member

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    After looking at the CBA website the comparison rate for fixed or variable are around 0.7 -1% higher. Although the interest rates that are being discussed here offered by CBA are quite competitive the would it still be the case that the comparison rate would still roughly 1% + higher.
     
  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Comparison rates are a load of rubbish. They don't take all costs into consideration.
     
  19. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Krisko I would consult with a broker and see what they suggest. As the you can see above they do have access to better deals than you can get.

    You could also could also consider setting up another LOC at the same time but not use it to be prepared for a future purchase. Always easier to set them up when valuations/job is good rather than later down the track.
     
  20. Krisko

    Krisko Member

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    I think your right it would be best to speak to a broker.

    Thanks everyone for their responses.

    *goes on the hunt for a broker*