6.14% CBA 90% LVR first home owners. Good deal?

Purchasing my first PPOR.
We have 250k deposit and 400k in ETFs.
House hold income 320k and likely up to 900k in 3 years when I finish medical speciality training.

Purchased PPOR, 1.15 million (5 bedroom on sunshine coast birtinya)
Morgage broker suggests 90% loan as it's "cheaper rate" when we borrow 1million vs sub 1mil.
We require multiple offset account due to pretax payment for myself and partner and need separate accounts come tax time.

Does 6.14% sound reasonable for multiple offset account? I'm hoping to get ability to split loan in future for debt recycling.

Aiming to pay/contribute to offset as much as possible. At present house hold income would stay around 320k pre tax for another 3 to 4 years and then escalate once I finish medical training.

I'm all over ETFs and other investments but housing and loans is another world.

Thank you!

 

At a 90% LVR 6.14% is quite competitive.

 

Thanks for your reply


Would you agree that if we have funds for 80% LVR that it's still best to do 90% if we get LMI waived being medical profession? We don't need the extra $ but the broker reccomends it. I assume they get higher commission with initial loan amount.

 

ive been offered 6.56%ish anz 80% lvr around 750k

 

If you have a good use for the extra 10% then perhaps it is worthwhile, but if you don't need it, there's no point in paying LMI. You might as well be giving the lender another 2% of the purchase price.

Brokers get paid based on the loan amount, minus the money in offset and redraw. Odds are the larger loan has no benefit to the broker. A 80% loan is easier to get approved than a 90% loan so if the broker has recommended a 90% loan it's probably because that's the best option for your circumstances.

 

Yes good rate for 90% given the Medico LMI waiver.... if it was an LMI deal then wouldn't be anywhere near that!

 

Thanks guys! Appreciate it!

 

6.14% is pretty competitive for 90% LVR. Unless the loan size is substantial over $1mil and lower LVR, CBA not even offering this rate for 80% LVR new to bank customers.

 

It's a phenomenal rate for that LVR - your broker is right, rates are generally tiered to loan size as well as LVR.

Cheers

Jamie

 

Rate is great - but it's 100% due to medico. Bank wants these customers and is pricing accordingly.

Get the broker to price based on 79% LVR (noted this can still be 79.99% LVR) - sometimes tool is priced better for 79% compared with 80%
And typically 80% is better than 90% but given medico/LMI waiver already might be price in.

If you get a lower rate you can then make a decision based on keeping further funds, which I always like or potentially lower rate.

Also not sure when the pricing was provided, but if it was before the 16/4 would be worthwhile double checking the existing.

 

Very good rate for 90%

Assuming you got that via an LMI waiver ?

 

In the end got CBA 6.12% with 89% LVR (loan 1,000,030) and no LMI due to being medical. First loan and not refinance. Multiple offset accounts.

 

Thanks! They came back today with 6.12% CBA.

 

If you are happy with that, go ahead.

I wonder whether there is another option: like whether you can consider 79-80% LVR and ask them what rate they can do for you at that LVR. If that is a good rate, you can take that. After settlement, top-up your loan with the 10%. Not sure if mortgage topup is allowed above 80%LVR. But if the market is still growing you can see how much more equity you buid in 1 year or more and the top-up your loan.

 

What would be the purpose of doing that? The new LVR will have the relevant rate applied to it anyway...

 

I suppose I was thinking the original poster (OP) can get (let's assume) a 6.05% for a lower LVR (initially 80%). Then the topup can be in one of the accounts with that rate, 6.05% and still reach LVR of 90%. So, any further discount will come off the 6.05%

If the OP starts with 6.12% and 90% LVR, then they have to negotiate any additional discounts later on and the starting point for discounts will be from 6.12% instead of discounts from 6.05%.

Maybe I am wrong or missing some other tricks or tax implications.

This is how we it for our PPOR (although not really planning to do that). But started with a low LVR (<60%), made a couple of banks compete, got what was a good deal at the time.
Then got a topup - which we needed for renos and other expenses, but even if the LVR is now higher, the rate is still what we negotiated initially + RBA increases - our further negotiations.

Further negotiations can happen, but sometimes if life circumstances change, the bank might decide not to give anymore discounts ... like if someone loses a job, has a kid, or other stuff.