Advice on First Loan

[Punter]

Hi!

Wanted an advice after getting enough confused with the agents.

Recently migrated to Australia and happy to inform that I am buying our first home (PPOR) at 450 k. Will rent it out to the owner for six months initially and then move in the house, getting the FHOG.

Have some funds saved (around 200 k) and some more coming in soon.

Am earning in the top tax pocket and hence plan to soon take up 2 or 3 IPs in future.

Looks like ANZ break free package along with Standard Variable rate is the way to go for the first loan on PPOR. Looking for free credit card, 100 % mortgage offset etc etc. in the package.

Seems to be one problem. Being our first home, we feel that the home (PPOR) should be in the name of both of us - me and my wife who is a house wife. And the subsequent IPs to be in my name alone to maximise on negative gearing.

Now I understand that the ANZ package will be applicable only for one set of name, either joint or single.

Any advice what to do or any alternate product?

Rgds

 

[Kristine..]

Hi Punter

There is no limit to the number of Breakfree Packages you can have, and you can have up to five loans in the one package.

So you can have one Package of loans in both names, and another Package with loans in your name only.

Easy peasy.

Obviously, the deals will hang on serviceability. Joint properties mean you are responsible for the whole debt but can only receive your allocate share of the rental income. And of course you can only claim your share of the taxable expenses.

Breakfree is one of my favourite packages

Cheers

Kristine

 

[Rolf Latham]

Hiya


The Breakfree thing is easy. If you are applicant 1, Mrs can be on PPOR loan even though not on title for IPS, and then only you on the IP loans with no effect to your neg gearing, since its title that determines tax benefits/ income distribution, so one package fee would cover your needs.

Under the current Westpac promotion of 70 pts off variable for lloans totalling > than 250 k id suggest that the WBC premier Advantage package allows more latitude for the following reasons.

1. Similar rate to ANZ Loans, where total limits > 250

2. Quite better serviceability model, that is borrow more.

3. Discounts are alwasy relationship based, vs individual loan based

4. No limits to the number of loans

5. Westpac wont force a credit card on you


ANZ is better where you want an Interest only loan on your PPOR (not an issue here), or you are using a corp trustee with a Hybrid Discretioanry trust, or you want a 95 % io Invest loan.

If you get hung up on fees the WBC deal is 100 bucks a year more than ANZ, but also offers better refinance/top up options under that model.

Then there is the CBA Mav option as well, and if you are in WA, bankwest has some good offering, but Id still prefer the WBC product

Think real hard about using an independent broker for the finance and structuring.

 

[Medine]

Hi Rolf,

How about St George, in terms of low rate?

Cheers, Medine

 

[Rolf Latham]

Hiya

STG pretty much evens on rate with ANZ, intro rate is a worry, but the major sticky with STG I have found is that you pay pay pay for the most simple reval, top up, or relimit, somethimg that doesnt happen with WBC

ta

rolf

 

[T.M.A.]

St George is the cheapest on a one or two loan package with not much restructuring required during the loan term. As Rolf mentioned, there are fees on fees with St George.

ANZ only allows a maximum of 5 loans under Breakfree and each Breakfree will cost you $295 a year. You do not need this for reasons also pointed out by Rolf. You can put both your names on your PPOR and just your name on your IPs.

I have not been a fan of Westpac since Novemner 2003 when they took away their 0.7% discount and tried to make it retrospective to all loan holders. They quickly dropped that idea in December 2003 and have recently become competitive again in the market for professional benefits packages.

Colonial is difficult to falter as there is no limit to how many loans you take in the future for $300 a year and there are no other costs.

I think your decision will fall to how much you are going to borrow and 'when' for your IPs as to where you go.

If you are only going to be sitting on one 450k loan for more than one year and half, have you considered the ANZ Professional Benefits Package? It will cost you a one off $400 application fee, no other fees and you have a choice of 2 offset accounts. One will cost you $10 a month (ANZ One) and offset from the first $1 deposited. The other will cost you nothing (HLIS) but requires a minimum of $2,000 deposited (which does not appear to be a problem for you) to begin offsetting. Both are 100% offset accounts.

 

[Rolf Latham]

Hi Rob

Good suggestion with the Prem Ben Pack - we use that a fair bit where the client doesnt want the credit card thats forced on them with the Breakfree.

Colonial has no other costs, hmmmmmmmmmmmm, either you shave your head or colour your hair .

Our experience suggests 8 out of 10 loans are no problem, but trying to pull something out of the sausage machine when it goes bad is a nightmare.

Having said all that, ALL lenders have their pros and cons, and it comes down to what time of year and what phase the moon is in I reckon.

WBC was till last month on a less than 24 hrs service turn around, this week you are lucky to get something done within a week, due to a special pricing offer they have introduced.

I also note their credit/LMI people are a LOT more flexible these days to the extent that they are loking at FHOG buyers that GE and PMI will not.

ta

rolf

 

[T.M.A.]

Rolf,

I hear what you are saying about CBA. I saw the fee thing happen with my sister which I cleared up very quickly for her.

I find that those using a broker dealing with Colonial instead of CBA direct do not have so many problems with the 2 ot of 10 that may be a bit difficult. The guidelines are pretty clear and can be enforced if need be. After all, there is a lot of legislation to support the written word. I also like their matching policy if a branch or mobile lender tries to play games through CBA.

As for WBC, I have no real faith. They are looking good for now but they might pull the big discount as quickly as they offered it. Also, their credit flexibility is still a bit all over the place but pretty good right now. I think they are still deciding exactly how they want to take on the competition. They need to do this very soon or they will be left far behind. Hopefully it just keeps getting better from here with no steps backwards.