Bankwest OFFset accounts

Currently doing some top ups for our 2 IPS so that we can down pay our deposit on these which is on a different account with our PPOR loan AND

Our mortgage broker has suggested us to refinance our PPOR to bankwest as it has unlimited offset accounts when you have "blah blah" account which costs 395 per year..

Our current PPOR is with a non bank MYrate which is at 5.29. We are ok with a higher rate as we like the functionality of almost a transactional account.

Heres where it gets weird our broker said that we should refinance 500k (even though we only have 340 loan) and get 4.69 and then do a permanent reduction straight after it has settled back to what we want and apparently the rate stays the same ..

thoughts? Im after offsets and high functionality to pay bills and store rent, savings ect..are there others than bankwest as he hasnt mentioned any others..
 
Currently doing some top ups for our 2 IPS so that we can down pay our deposit on these which is on a different account with our PPOR loan AND

Our mortgage broker has suggested us to refinance our PPOR to bankwest as it has unlimited offset accounts when you have "blah blah" account which costs 395 per year..

Our current PPOR is with a non bank MYrate which is at 5.29. We are ok with a higher rate as we like the functionality of almost a transactional account.

Heres where it gets weird our broker said that we should refinance 500k (even though we only have 340 loan) and get 4.69 and then do a permanent reduction straight after it has settled back to what we want and apparently the rate stays the same ..

thoughts? Im after offsets and high functionality to pay bills and store rent, savings ect..are there others than bankwest as he hasnt mentioned any others..

CBA which owns Bankwest also has multiple transactional offset :)

Sometimes is can be beneficial to borrow a little bit extra to get you into that higher discount bracket, it's not weird just him trying to get the best rate... be it manufactured. Rather then paying down why not keep the funds in available in a seperate loan for future deposits? Or possibly set up LOC and debt recycle?

What is an almost transactional offset? If it's not a bank is it in fact an offset for tax purposes or a disguised redraw facility?
 
The most competitive published rate BankWest has is 4.79% for loans over $500k. They may be willing to negotiate to 4.69% but it would be a stretch.

Also BankWest don't have a product with a $395 annual fee. As Brady suggests, they may be thinking of CBA.

The reason the broker is pushing you to borrow $500k is they can get you a better rate at this price point. The permanent reduction suggestion kind of works but I'd suggest that an extra $160k is a lot extra to be borrowing for a slightly better interest rate. It's not a bad suggestion, but you should also think about what your longer term goals are and plan to that, not just a cheap rate.

All mainstream lenders have offset accounts (some are better than others, but most are sufficient) and plenty of ability to pay bills.
 
The most competitive published rate BankWest has is 4.79% for loans over $500k. They may be willing to negotiate to 4.69% but it would be a stretch.

Also BankWest don't have a product with a $395 annual fee. As Brady suggests, they may be thinking of CBA.

The reason the broker is pushing you to borrow $500k is they can get you a better rate at this price point. The permanent reduction suggestion kind of works but I'd suggest that an extra $160k is a lot extra to be borrowing for a slightly better interest rate. It's not a bad suggestion, but you should also think about what your longer term goals are and plan to that, not just a cheap rate.

All mainstream lenders have offset accounts (some are better than others, but most are sufficient) and plenty of ability to pay bills.

They do, it's called the 'Complete Home Loan' and for loan over $500k@80%LVR will give you current variable rate of 4.79% (which you may also be able to reduce slightly) and it allows you to set up multiple loans with attached offsets.
 
I understand where your broker is coming from, and sometimes it does make sense.

Ie i had a deal with ING, where the refinance amount was $482,000 so instead of doing a direct $ to $ refinance we asked for other $13,000 to make the loan amount $501,000 --- the rate went from 4.88% down to 4.83% ...yes only 0.05% but that's 0.05% OVER THE ENTIRE loan...after settlement the client simply didn't use the extra $13,000 and wasn't charged any extra interest as it was in the offset account anyway ( all personal use..ie ppor so no tax consequences)

- Better rate overall for the entire loan
- Extra funds if required ( optional)

Having said that it sounds like your "cash out/equity amount" is a large amount...might or might not work- depends what your overall goals and requirements are, but from a rate perspective it's ok.

-----

The product your broker is suggesting is the Bankwest " Complete package/complete home loan" ...it's a new product only released 2 month back- It's their pro pack loan with multiple offset ( same as CBA's) and free credit card + can have multiple loans under this one package under one fee.

Rate rise it's advertised as 4.79% for 80% LVR or less for loan over $500,000- but for certain brokers who's part of some aggregated group ( ie for us it's connective) they are offering 5.69% for a short period of time only on a case by case basis.

Bankwest has a lot of 90-95% loans on their books, so they now want to balance this out by offering a good rate for 80% loans over $500,000.

Cheers
 
Your paying down IP loans instead of your PPOR loan?

no its just a paper shuffle that will be easier to work with. We had the deposit attached to our home loan acc 80k. Now the properties have increased 150k I am increasing those loans so we dont have the 80k attached and the 80k is on the iP loans...

If we borrow 500k and only use 340 we still have repayments at the 500k limit dont we? As its our PPOR its principle and interest loan.
 
no its just a paper shuffle that will be easier to work with. We had the deposit attached to our home loan acc 80k. Now the properties have increased 150k I am increasing those loans so we dont have the 80k attached and the 80k is on the iP loans...

If we borrow 500k and only use 340 we still have repayments at the 500k limit dont we? As its our PPOR its principle and interest loan.

PRESUMING your broker structure the loan correctly and in a tax efficient manner..

The way to overcome your issue, which is common; is to have 2 loan splits or multiple loan splits if required for tax reasons.

Loan 1 ( ppor) : $340,000 - P/I -- 4.69% All good?
Loan 2( not 100% sure what this is used for) - $160,000 ----I/O --- 4.69% no interest paid as it's a $0 balance


So overall you only have a $340,000 mortgage.


P.s I got a bit confused when you say "I am increasing those loans so we dont have the 80k attached and the 80k is on the iP loans..." is the 80,000 in an offset account or sitting as a redraw?
 
The product your broker is suggesting is the Bankwest " Complete package/complete home loan" ...it's a new product only released 2 month back- It's their pro pack loan with multiple offset ( same as CBA's) and free credit card + can have multiple loans under this one package under one fee.

Just saw that today, I don't do a lot of business with BW so I wasn't aware of this.

The reason I'm reluctant to recommend BW is simple. They keep changing their products, it runs on a cycle of about 2 years and they were about due for another change.

They offer a new product with excellent interest rates, it's the new killer deal. If you want to switch over, no problem, it's a switching fee of $495 (one of the highest in the industry).

The new product replaces previous products. The rates on the old product start to increase, sometimes quite dramatically.

BankWest has done this consistently since 2008, it's essentially done to attract new customers at the expense of old customers. Ultimately I just don't think they market their products honestly.
 
PRESUMING your broker structure the loan correctly and in a tax efficient manner..

The way to overcome your issue, which is common; is to have 2 loan splits or multiple loan splits if required for tax reasons.

Loan 1 ( ppor) : $340,000 - P/I -- 4.69% All good?
Loan 2( not 100% sure what this is used for) - $160,000 ----I/O --- 4.69% no interest paid as it's a $0 balance


So overall you only have a $340,000 mortgage.


P.s I got a bit confused when you say "I am increasing those loans so we dont have the 80k attached and the 80k is on the iP loans..." is the 80,000 in an offset account or sitting as a redraw?

BRILLIANT thank you soo much.

I have a funny feeling my broker was trying to tell me this but I need to see it on paper to understand..Yep I like the loan 1 and loan 2 very much as we can then use it to by more properties and the loan remains clean for tax purposes just as we have done previously.

Sorry to confuse no the 80k is a different loan but the equity on our PPOR was used to get it from the same bank. Loan 1 PPOR loan 2 Deposits for IP..different bank Loan 1 IP 1 Loan 2 IP 2...does that make sense?
 
BRILLIANT thank you soo much.

I have a funny feeling my broker was trying to tell me this but I need to see it on paper to understand..Yep I like the loan 1 and loan 2 very much as we can then use it to by more properties and the loan remains clean for tax purposes just as we have done previously.

Sorry to confuse no the 80k is a different loan but the equity on our PPOR was used to get it from the same bank. Loan 1 PPOR loan 2 Deposits for IP..different bank Loan 1 IP 1 Loan 2 IP 2...does that make sense?

Mick C was spot on, it's what I was suggesting in my first post and likely what your broker was suggesting from the start :)

It's always nice to hear it from other sources though :)
 
Sorry to confuse no the 80k is a different loan but the equity on our PPOR was used to get it from the same bank. Loan 1 PPOR loan 2 Deposits for IP..different bank Loan 1 IP 1 Loan 2 IP 2...does that make sense?

Not really, and it sounds like you are getting confused about the deductibility of the loans.

The purpose of the loans is what gives them their potential tax deductibility - not what the loan is secured against.

Have you sounded out your plan with an accountant or lawyer?
 
Not really, and it sounds like you are getting confused about the deductibility of the loans.

The purpose of the loans is what gives them their potential tax deductibility - not what the loan is secured against.

Have you sounded out your plan with an accountant or lawyer?

Yes.. Purpose of 80k was for deposits for IPs in a seperate loan. The security was ppor. The 80k that goes back on the original 80k will be for deposits for IPs .. What's wrong with that?
 
Yes.. Purpose of 80k was for deposits for IPs in a seperate loan. The security was ppor. The 80k that goes back on the original 80k will be for deposits for IPs .. What's wrong with that?

I like it. Always nice to transfer the debt back onto the property when appropriate, makes it a little bit easier and neater :)

No issues there.
 
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