4.79% variable rate - is it good enough?

[z611143]

Just wanted to get a better understanding of this.

Variable Rate - Goes up and down dependant on RBA rate?
Fixed Rate - Is a fixed rate @4.8 / 5% can be anything for a fixed amount of time that doesnt change no matter what the rates are changed by the RBA?

Can someone explain to me what offset and redraw are? Keep seeing them mentioned, but not entirely sure what they do or what they are good for? Do i need one?

What are some things to take into consideration other than the rate that should be calculated into picking the right lender?

If im that keen now, im probably only going to have 10%, Well maybe a bit more but certainly not the 20% so id need to pay LMI. Maybe a chance for 15% but that might be too long away, I dont think that would avoid LMI either for me.

 

[Peter_Tersteeg]

Just wanted to get a better understanding of this.

Variable Rate - Goes up and down dependant on RBA rate?
Fixed Rate - Is a fixed rate @4.8 / 5% can be anything for a fixed amount of time that doesnt change no matter what the rates are changed by the RBA?

Can someone explain to me what offset and redraw are? Keep seeing them mentioned, but not entirely sure what they do or what they are good for? Do i need one?

What are some things to take into consideration other than the rate that should be calculated into picking the right lender?

If im that keen now, im probably only going to have 10%, Well maybe a bit more but certainly not the 20% so id need to pay LMI. Maybe a chance for 15% but that might be too long away, I dont think that would avoid LMI either for me.

Fixed rates means that the rate is fixed at a particular percentage for a period of time. The rate doesn't change during that period regardless of what else happens in the market. It means you know exactly what your repayments will be for a period of time.

Most variable loans have a redraw facility. When you make extra repayments, you can 'redraw' those extra repayments back if you need the money for something else.

Some variable loans also have an offset feature. An offset account is really just a savings account that is associated with the loan. Instead of earning interest like most savings accounts, the amount of money in the offset account is applied to the loan as if it were extra payments (even though it's still stored in a separate account). Whilst this doesn't affect the amount of money you owe on the home loan, it does affect how the interest is calculated.

Because an offset account keeps money in a separate place from your home loan and it affects how the interest is calculated but not how much you actually owe, there are some interesting and useful tax implications around offset accounts. There's been thousands of threads written on this topic in the finance section, but best to wrap your head around how they work before trying to understand the tax aspects.

 

[spludgey]

Jon Mardell got me 4.69% and I've got around $1M of loans with St George.
80% LVR on my more recent purchases, 95% and 90% on some of the older ones.
Ongoing fee of $395 per annum.
No offset (not sure if I could get one, I've got two elsewhere).

 

[Peter_Tersteeg]

Jon Mardell got me 4.69% and I've got around $1M of loans with St George.
80% LVR on my more recent purchases, 95% and 90% on some of the older ones.
Ongoing fee of $395 per annum.
No offset (not sure if I could get one, I've got two elsewhere).

Would it be fair to say that the older ones are probably below 80% LVR at this point? LVR factors quite heavily into how generous lenders are willing to be.

Last week we got a client 4.65% for $1M across 3 loans over 3 properties.

 

[perthguy]

It depends what you are looking for from your loans. I'm just doing a refinance to ING with 4.63% variable for one loan and 4.69% fixed for 3 years on another loan. Total loans is over 1 millon and LVR is well under 80%. These are not the cheapest interest rates that my mortage broker found. The reason I selected ING because they have the features I was looking for and the lending policies that suit my situation. Whereas some of the other offers did not have those features or did not have lending policies that suit what I am doing. The lowest interest rate is not always the "best" deal.

EDIT: add a $199 pa annual fee for ING.

 

[spludgey]

Would it be fair to say that the older ones are probably below 80% LVR at this point? LVR factors quite heavily into how generous lenders are willing to be.

Last week we got a client 4.65% for $1M across 3 loans over 3 properties.

One was bumped up to 83%, but as a whole, my loans with them are a little under 80%

 

[D.T.]

One was bumped up to 83%, but as a whole, my loans with them are a little under 80%

I'm at 4.74 at 90 lvr for what its worth

 

[spludgey]

Some great rates going around these days by the looks of things!

 

[perthguy]

Some great rates going around these days by the looks of things!

Exactly 3 years ago, my average loan interest rate was 9.5% (don't ask )
The cheapest interest rates 3 years later are insane:
me bank: 4.59% fixed for 3 years
newcastle permanent: 4.49% fixed for 3 years
loans.com.au 4.48% variable

Crazy! Of course these loans might not suit your criteria, but they have pretty low rates.

 

[Rolf Latham]

pretty low rates.

pretty vs ugly ?

ta
rolf

 

[z611143]

Whats the best rate i could get for <300k loan?

 

[perthguy]

pretty vs ugly ?

ta
rolf

yep!
pretty is 4.49% fixed for 3 years
ugly is 9.5% ... ouch!

 

[Jenko]

I'm with CBA I have five loans, a debt of 2.3 million. All of my loans are variable and we have a LOC on our PPOR. Our current interest rate is 4.9% I'm going to put it to them that they do me a better deal but what is the best rate could I expect?

 

[Mick C]

If you stay with CBA- should be able to get 4.65%.
Move bank it be a touch lower....4.59% etc...


P.s presuming ur loans are not x cross it be easier to neg on the price as well.

 

[Rolf Latham]

I'm with CBA I have five loans, a debt of 2.3 million. All of my loans are variable and we have a LOC on our PPOR. Our current interest rate is 4.9% I'm going to put it to them that they do me a better deal but what is the best rate could I expect?

4.6 id expect...........but if 2.3 is your total lending, all with the one lender, rate may be the least of your concerns.

if the 2.3 is part of your 10 milll plus portfolio, then no probs

ta
rolf

 

[z611143]

Just to extend on what i asked above.

Im currently with Commonwealth bank, however i dont think they are the best to be with in regards to loans, are they?

So which bank would potentially be a good one to move to with my situation. Looking to buy my first IP ect.

Looking to loan 300k or less. Who would be a good one to go with for security and for a good rate deal?

Z6

 

[Rolf Latham]

Looking to loan 300k or less. Who would be a good one to go with for security and for a good rate deal?

Z6

if rate is the prime / sole concern

Loans.com.au

sub 4.5 variable

ta
rolf

 

[Jenko]

Thanks guys for the heads up. If I can get my rate down to 4.65% that's almost $100 pw. Better off in my pocket.

 

[Brady]

Just to extend on what i asked above.

Im currently with Commonwealth bank, however i dont think they are the best to be with in regards to loans, are they?

So which bank would potentially be a good one to move to with my situation. Looking to buy my first IP ect.

Looking to loan 300k or less. Who would be a good one to go with for security and for a good rate deal?

Z6

You want security CBA are the lagest bank in Australia...

Pending what your future plans to whether CBA is the best bank for you now, it will likely play some part of your investment journey. If you're planning to have multi million dollor borrowing over short period will require some good planning, also if your serviceabilty is tight will need some good planning. But if your planning to acquire multiple properties over an extended period and servicing isn't an issue will be fine to smash out CBA.

If you're a existing CBA customer will be good for >90% although CBA doesn't price the best for >90%, which might not hit your 'good rate deal'

For <90% CBA will be good for you, decent rate.

Speak to a decent banker or broker that you can trust and go from there.

 

[Jenko]

Typical bank... "Where did you get the 4.65% from?".. As if they don't know!!
Is there somewhere where all the rates are listed? So I can send it to them?