What rates can I get?

Discussion in 'Loans & Mortgage Brokers' started by Ardi, 18th Feb, 2020.

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  1. Ardi

    Ardi Well-Known Member

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    Hi,

    Looking for advice on what rates we should be expecting with refinancing the below loans?
    Broker has indicated high 3's IO. Is this the best to expect?

    We are saving for PPR, so Cash flow/ savings are king for us at present, so we can pay down PPR as quickly as possible.

    Currently using offset against IP3 for savings.

    IP1 - Value 730k, loan amount 478k, ~7 years IO left @ 4.1%. CBA

    IP2 - Value 610k, loan amount 350k, ~7 years IO left @ 4.1%. CBA

    IP3 - Value 600k, loan amount 380k, P&I repayments @ 3.5%. BankWest. May look to sell this depending on serviceability constraints when looking for PPR.

    IP4 - on market to sell to improve serviceability for PPR.

    Plus preapproval for PPR.

    Cheers,
    Ardi
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Best to refinance the Bankwest loan to an IO product as it will have the biggest impact on your cashflow - leave the CBA loans as you have 7 years IO on them and when refinancing you're likely to only get 5 straight off the bat (hard to know for sure without knowing total financial situation)
    between 3.5% - 4% for Investment IO loans is what you should expect, depends if you qualify for certain lenders - your broker could help you with this
     
  3. spludgey

    spludgey Well-Known Member

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    I know everyone is different, but I'd prefer P&I at 3.1% over IO at 4.1%.
     
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  4. Ardi

    Ardi Well-Known Member

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    I was thinking the same, but the P&I was still a bit too high given we will likely have a substantial PPR loan in the near future. (Using CBA calculator).

    If it was only marginal the P&I would be a given.
     
  5. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    CBA have just released 3 yr fixed rates 3.39 IO - bloody good! Variable is still higher at the moment.
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    Cashflow difference between 3.1% P&I Vs 4.1% IO is $299 per month based on $350K loan and $408 for 478K loan
    Combined cash flow difference = $8484 per year
     
  7. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    4.1 is way too high for IO INV variable at the moment. Mid to high 3’s is more realistic, depending on lender.
     
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  8. Ardi

    Ardi Well-Known Member

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    Jess, will they do this with IO for 5 year period? Does it have offset account?
     
  9. Ardi

    Ardi Well-Known Member

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    Yes, good to be paying down debt. But that is also 8484 that could go towards non-deductions debt.
     
  10. Lindsay_W

    Lindsay_W Well-Known Member

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    Yep - that's what I was demonstrating, you could use the saved money towards the PPOR Non deductible debt, even with the higher rate you still are better off with IO from a cash flow perspective. :)

    They will allow 5 years IO with initial 3 years fixed - no offset during the fixed period - offset applies when it reverts back to variable rate.
    As you already have 2 of your loans with CBA it would be simple to apply the 3 year fixed rates to them, wouldn't need to refinance.
     
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  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    yeah, but the spread isnt that :)

    ta
    rolf
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Whats the middle to end game ?

    ta
    rolf
     
  13. Ardi

    Ardi Well-Known Member

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    Long term is to pay off PPR and build net wealth to allow FIRE as early as possible.

    Aim is to buy PPR in next 12 months, max ~750-800k. Then work hard on paying that down as quickly as possible.

    Plan on holding IP's for minimum 5 years if possible.

    Thoughts are if we can get rock bottom interest rates so that we can save then pay down PPR as quickly as possible.
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    A better question could be........ how can I pay my PPOR off more quickly.

    Has your broker talked about how to achieve that via say an active debt recycling strategy

    rate is very commonly tertiary to a long term financial outcome

    ta
    rolf
     
  15. Ardi

    Ardi Well-Known Member

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    No, not specifically. I am purely looking to pay down as quickly as possible with savings, low rates and offset.

    Given we already have IPs positively geared, and capital , is there much opportunity?
     
  16. Tonibell

    Tonibell Well-Known Member

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    Would you consider a fixed rate ?

    We just got offered 3.19% for 1, 2 or 3 year fixed with CBA.

    Assuming you have the Wealth Package - best offer on variable was 3.79%.

    But we are also on P&I which might impact the offer.
     
  17. Brady

    Brady Well-Known Member

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    3.19% is the advertised 1, 2 or 3 year fixed (this recently changed)

    Noted that's P&I believe OP is looking at IO which would be

    3.39% 1, 2 or 3 year fixed.
     
  18. Tonibell

    Tonibell Well-Known Member

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    Your right it is P&I - I added that to my post in between.

    What would be the offer for IO fixed ?

    Surely a lot less that 4.1% - 1 year goes by pretty quickly !
     
  19. Brady

    Brady Well-Known Member

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  20. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    No offset on fixed, but rates are below. Pretty amazing 5 yr fixed.

    upload_2020-2-18_12-58-28.png
     
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