Westpac Dilemma - Need input ASAP

So I have several homeloans with Westpac, all investment interest only. LVR around 70% and total loans approx 5 million.

Couple of my loans are set to expire early next year and the remaining the following year.

I have been offered 4.19% for 3 years investment interest only and need to accept it by end of next week or else it will lapse and revert back to 4.49%.

The total break fix costs are 2000. The ones set to expire early next year (currently on 4.10%) total $1500 in break fix costs. The ones set to expire early 2019 (currently on 4.15%) have only $500 in break fix costs.

I tried to get these waived but the bank wouldnt budge. Wanting to get peoples opinions on whether I should pay the break fix costs, and lock in this 3 year rate. The pros I see thus far is 4.19% is a pretty sharp rate for investment interest only especially with one of the big 4 banks and the other pro is less headache and less costs in switching etc...

The cons is i will be losing the 2000$ break fix costs plus the rate difference costs I will incur for the loans temporarily on 4.10% and 4.15%. You would say approx half of the loan value is on 4.10 while the other half is on 4.15.

Any input is greatly appreciated.

 

Hi Rolf,

Its not just that its also the rate difference costs that i need to consider on top of the break fix costs as mentioned above.

 

You're trying to weigh the cost of breaking a fixed rate now and paying some fees, vs what you'll be paying for the loans in 6 months time. Impossible to know the answer with any certainty...

I suspect that rates will increase at some point in the next 12 months. By paying the break cost now and fixing you get certainty around what the loan will cost for the next 3 years. Odds are fixed rates won't be 4.19% next July. I think they'll be higher and if they are that $2000 might save you a lot more over the next 3 years.

I could be wrong though. Fixed rates might fluctuate a bit here and there and be roughly what they are today or possibly lower, which would cost you money if you switch now. Like I said, impossible to predict.

The other thing to consider is they're offering you the ability to extend your I/O period. That's something they may not be willing to do in 6 months.

 

No doubt WBC IO rates at the moment are good. Will they last? Will someone else make a move in this market? Don't have a crystal ball.... little wonder to say they won't waive the cost unless someone else gets more aggressive in this space.

Have you modelled out the savings vs. break cost? (hard to do without knowing specific loan sizes of each loan and which are at certain rates). Let the numbers make the decision...

 

Looking to lock in rates with westpac also, best IO rate on offer is 4.59%, I spoke to them wanting the flash rate 4.19 but only for new customers. They can only offer me 4.19% if P&I. If you can get 4.19 IO I'd be jumping all over it! Unfortunately with foreign income servicing I can't refinance to another lender so have no choice but to stay with WP

 

4.59% seems high, is your LVR over 80%?

 

Agree not ideal, seems to be their online offering too. Off the top of my head I'd be well under the 70% LVR

 

If 80% LVR or less you should be able get 4.09% Fixed for 2 years or 4.19% fixed for 3 years, this is under their Premier Advantage Package and for loan amounts >$250K if that's for new clients only that is disappointing

 

Unfortunately yes it's for new clients. Attached screenshot of their online rate