Bank of Adelaide - Interest Only Fixed Offset

[Vanillascent]

So my broker just showed me a niche product that has been on the market for a while that has just had a competitive rate drop. Was looking at ING but their serviceability calculators work off 8% interest which dropped my borrowing capacity 30k below any other bank I have looked into and falls short of what I am seeking to borrow by a good 20k.

Bank of Adelaide (Bendigo Bank) - 3 year SmartFIX - 3 year FIXED at 4.89% with OFFSET account linked to it. P&I and IO options. Found it quite interesting. $375 application fee which they will waive. $120 lodgement fee. No annual fees but with $15 monthly fee - unlimited transactions. They have just dropped from 5.09% and previously had a cap on transactions over $10 worth per month (based on $2/transaction).

Has anyone banked with them before or can anyone offer some insight into their experience with the product?

Thanks.

T

 

[D.T.]

$15 monthly fee is pricey!

But... seems like you are only focused on the price of the product? You don't care about where this lender sits in terms of lender policy? If you hope to have a flock of properties some day I probably wouldn't be looking at Bank of Adelaide, even if they were the cheapest.

 

[Vanillascent]

This is my first property. In all honesty I probably won't be in a position to buy again for another 3 years minimum. It isn't all about price. But I do want flexibility to turn this house into an investment in a year or so. I am basically looking to live in it for 12 months minimum to get the stamp duty exemption. I see great benefit in being able to fix the rate to give me certainty for 3 years because I believe interest rates will be rising towards the end of the year/early next year and if I decide to set up camp for longer than the 3 years (undecided), it will work well. This product also allows for FREE variations for the life of the loan, ie convert to Interest Only, split loan, change to fixed rate, etc.

 

[Shahin_Afarin]

Have you considered a combo loan part fixed part variable? This will broaden your options.

The variable portion needs to be the approximate amount you will need to offset for say 3 years (or however long you need to fix).

One of the majors is doing 4.69% for 2 year fixed rate.

 

[Corey Batt]

Are you looking at accessing equity in the future from this property? If you don't have strong serviceability, you may find that Adelaide Bank's serviceability does fall off sooner rather than later as your portfolio grows, which may leave you with equity that you cannot access.

Product wise it's fine, does what it needs to for a niche.

 

[Vanillascent]

I was looking at part fixed part variable with ING originally. My issue is that my situation around how much I could potentially offset over a fixed period on my current income is much different from my future potential. I have unspecified trust distributions that will be coming into play as of this year (over $10k per year minimum) and am likely to see quick and large increases in my wage through work (again not able to predict when this will happen as it will be subject to the 64 year old CEO retiring - something that will eventuate in the next 1-6 years).

 

[Shahin_Afarin]

Can you not estimate the approx amount you will have saved up and keep that amount as your variable split?

I think you are seriously cornering yourself by going to a lender just so it has an offset against the fixed portion.

Also is the LVR under or above 80%?

 

[Vanillascent]

LVR is 80%

 

[Shahin_Afarin]

Ok so thats good but still should try and get the lender right now.

All I'm saying is don't box yourself in by choosing only a lender that does fixed offset. There is much more to it than that.

 

[Vanillascent]

I am not going for the product just on fixed IO offset alone. I have compared it to others and I think it is a pretty good product from my analysis even with pricy monthly fees - still out do a lot of others who charge annual fees. But open to other's thoughts. That's why I am here

 

[Shahin_Afarin]

Your broker is in a better position to comment than us but I recommend sitting down with him/her and talking about what you want to do short and long term and then planning for it accordingly.

Tons of products out there which are cheaper than Adelaide Bank but there are other elements to the equation such as are you better off using more conservative lenders first and then the more generous servicing lenders later or is this not even an issue based on future plans?

Do you need access to free upfront valuations because you want to do regular equity releases? Will you require unlimited offsets? and the list goes on.

 

[tobe]

start variable, and then fix part or all of the loan if you cant sleep.

NOTE, dont fix based on price. Fixing isnt about price, it is about risk mitigation.

having trust distributions (or just some cash in the bank, say 3 months living expenses) would seem to some like a risk mitigation strategy in itself.....

 

[Shaneelastic]

I got with adelaide bank
4.54%?fix ed for 2 years
Full offset
No monthly fees
App fee was I think < 500

 

[BMW]

Have one loan with Adelaide Bank.
3yr Fixed at 5.8 about half way through.

Been fairly happy with them, although regretting fixing the loan now as our situation is changing and will probably sell our PPOR in the new year which has some of the IP debt attached. Hoping we can somehow move some of that debt to the Adelaide Bank loan without having to pay it back.

One little thing i like about Adelaide Bank is the statements every month where it states how much you are saving by having funds in the offset account. Adds a bit of reality to our saving goals.

PS we had 2 properties cross collateralized, and spent a bit of time/money and effort to uncross them. In hindsight it was a mistake to uncross them.

 

[Vanillascent]

Been fairly happy with them.

One little thing i like about Adelaide Bank is the statements every month where it states how much you are saving by having funds in the offset account. Adds a bit of reality to our saving goals.

Thanks for the feedback. Good to know! I like being able to see the difference. It's the nerd in me haha.

 

[peaches]

Adelaide are a good lender, good service and some nice products. I have never had a full doc customer complaint. I have had one low doc customer complain. I can't say that about many other lenders.