Join Australia's most dynamic and respected property investment community

To refinance or not? Would appreciate some advice

Discussion in 'Property Finance' started by Xie, 13th May, 2016.

  1. Xie

    Xie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    71
    Location:
    Victoria
    Hi Guys, I would appreciate some advice. I am currently with Suncorp and pay 4.67% and am wondering if I should refinance. My broker has presented the following:

    I can source 4.22% for you it has 100% offset with I/O repayments. Same product as what you currently have. Set up costs will be $495 (including legals). No annual package fee, however a $15 monthly fee will apply (equates to $180 per annum). There would also be government charges of ~$200 and also $350 to discharge the mortgage. On my loan it would be a saving of $492 per annum. - with the Adelaide Bank

    It seems like a no brainer in terms of the interest rate differences but what else should I be considering? Apparently, the Adelaide Bank are more flexible than Suncorp in terms of releasing equity, which I want to do for a future IP. However, it is also going to take a while for me to break even with all the set-up costs.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,029
    Location:
    Sydney
    I wouldn't like to move to Adelaide bank. There are other options out there which would be better.
    Suncorp will look at reducing your rate if you ask.
     
  3. Kinnon Bell

    Kinnon Bell Finance Broker

    Joined:
    14th Jun, 2015
    Posts:
    477
    Location:
    Cairns
    Without knowing the full story sounds like out of the fry pan and into the fryer.
     
    Terry_w likes this.
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    I wouldn't have thought Adelaide were better with equity releases than Suncorp.

    In fact - I'd argue that Suncorp are much better in this space. Adelaide a more rigid.

    Take the offer to suncorp and see if they can drop your rate.

    Cheers

    Jamie
     
  5. Xie

    Xie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    71
    Location:
    Victoria
    Thanks for the replies Guys. I did go to Suncorp but they will only go down to 4.37%. Now I am confused, do brokers get special deals in terms of releasing equity etc... and how do I know which bank will be more flexible?
     
  6. Xie

    Xie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    71
    Location:
    Victoria
    Can you explain Kinnon would love to hear your thoughts.
     
  7. Kinnon Bell

    Kinnon Bell Finance Broker

    Joined:
    14th Jun, 2015
    Posts:
    477
    Location:
    Cairns
    Hi Xie, Sometimes putting someone with a lender on the face value of things doesn't make sense as they're only seeing a little bit of the big picture but once you see more of the picture then it may start to make more sense.

    A lot of banks have their policy niches so sometimes a scenario can be a little bit unusual where it will need to be put with a certain lender as the borrower fits that niche with that particular bank and not others.

    If it's a 'vanilla' type scenario though then there would be better choices than Adelaide Bank (or Suncorp for that matter).
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    Is it an IP you're refinancing or a PPOR?

    I agree, ABL is an odd choice - there's likely to be better options than that.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,106
    Location:
    Melbourne, Nationwide
    4.22% for an investment loan is a good deal, but as others have already stated it's not just about getting the best rate.

    Other lenders might be slightly more expensive, but probably only by a few dollars (such as a cup of coffee a month). When you consider the costs of moving, refinancing may not be as cost effective as you think.

    Additionally the Adelaide isn't necessarily a great solution for investment finance. If this is a single setup and forget for the next 5-10 year it's no big deal, but if you're wanting to build an investment porfolio and actively use this property to leverage into that, then there's probably better lenders to work with.
     
  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    ABL is only offering a slightly lower rate - there's refinance costs involved and they're generally a more rigid lender (IMO) than Suncorp. All those factors combined would keep me with Suncorp. If the lowest rate is the number one priority - hit up one of the online cheapies.

    Cheers

    Jamie
     
  11. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Going by rate alone shouldn't be your only consideration.
    Different lenders have pluses and minuses.
     
  12. Xie

    Xie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    71
    Location:
    Victoria
    Hi Jess, it's an IP and I am considering staying where I am given all the feedback.
     
  13. Xie

    Xie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    71
    Location:
    Victoria
    Hi Jamie, no, the lowest rate isn't my only consideration. I have a fee free package and Suncorp has sub accounts which are fantastic, I also don't pay the annual fee. What I don't get is how my broker says that the Adelaide bank is flexible and then investors here say something different. My broker is experienced and is an investor himself, so why is there such variance in opinions? Would love to hear your take on this.
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,029
    Location:
    Sydney
    My last loan application with Adelaide was very painful where as Suncorp is a breeze to deal with. Also just rolled over an IO term which was expiring and extended it for another 5 years when the client no longer services, with no need for payslips etc.
     
    Jess Peletier likes this.
  15. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,715
    Location:
    Sid en e - olympic city
    Was the IO rollover you speak of with Suncorp ?

    I have found them to be a good lender, in the start of the process and once setup, but everything in between can be a pain, especially when they have specials and get in casuals or contractors.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,029
    Location:
    Sydney
    Yes, with Suncorp
     
  17. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,172
    Location:
    Gold Coast
    ABL are an ok funder for 80 % lends for us at least

    Above that you are atthemercy of the LMI providers,BUT they do have access to both Genworth and QBE.

    Id place Sun and ABL on par pretty much for many things

    One thing that may make your decision easier...........have you paid lmi on the current loan?

    ta
    rolf
     
  18. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,117
    Location:
    Melbourne
    @Xie the brokers on here will offer general advice based upon there experience dealing with certain lenders. Some have different views but the consensus is usually similar.

    I have read many posts over the years which I found to no not be relevant to my situation yet if I had taken that advice it would have cost me. This is by no means me having a go at the brokers on here they are all brilliant!

    Point I am trying to make is unless they are your broker with whom you sat down with and discussed your goals then the advice will be general in nature. Your broker may have suggested AB because they have the cheapest rate on the market and you suggested your goal was having 1 IP and paying down your PPOR as fast as possible. In that situation, the lowest rate is all you may need. Perhaps your LVR is under 80% and the cost of refinancing without LMI is not an issue and when you way up the cost savings every 2 years to refnance it saves you money.
     
    SueA likes this.
  19. SueA

    SueA Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    89
    Location:
    North brisbane
    This is doing my head in as well. Conflicting advice. When you have a fairly long relationship with your broker, assume they are acting in your best interest, then read here that everything we are doing is not the best way, or in fact terrible advice, what do you do???
     
  20. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    At the end of the day - your broker knows more about your situation than anyone. I wouldn't just dismiss their advice completely - they might have a good reason for the recommendation they've made.

    Cheers

    Jamie
     
    Terry_w likes this.