Bankwest or NAB Dilemma

[superbird]

Hi

I currently have a dilemma and have been offered the following loans:

Bankwest:
6.90% for first 3 years, then reverts to much higher rate of 7.58%. I spoke to the bank manager though about this and she assured me that she could switch me to the Premium Loan (rate of 7.10%) and waive the transfer fee, however she can't put that in writing.
$15 monthly offset fee
LMI of $9,150 capitalised onto loan

NAB:
Offered 0.8% discount off standard variable rate for life of loan - 6.87% due to me complaining about service.
Annual fee for first year waived. Otherwise, ongoing annual fee of $395.
LMI of $8,668. Only half of which can be capitalised.

Now long-term wise NAB is the better offer, however in the short term the Bankwest one is better for me as I can capitalise all of the LMI (freeing up cash) and I am a current customer. I calculated only $100 difference (NAB's favour) between NAB and Bankwest over the 3 years.

I was thinking after the 3 years I would definately shop around again, however am worried that I would be hit with another LMI premium if my LVR is not greater than 80%.

What should I do? I really would prefer to have the extra $4k cash (if going with Bankwest as LMI fully capitalised) sitting in the offset account, but should I really be looking at the bigger picture.

Cheers

 

[Peter_Tersteeg]

BankWest has a fantastic track record of messing around with products and rates. It's been about 4 years since they had a simple product which is consistantly compeditive. Everything about BankWest is honeymoon rates and special deals. Each time they introduce a new special deal their service reduces to non existant. (For what it's worth, they can switch products after the honeymoon period and will charge $495 for it).

NABs service also leaves something to be desired IMHO, as you've already noted. I can't recall a single NAB deal that's been smooth sailing, yet we consistantly acheive this with almost every other lender (including HomeSide, the broker channel for NAB).

If your criteria for a loan is consistantly compeditive rates, fully capitalised and inexpensive LMI, consider ING.

 

[Spectre]

Superbird
If this helps you

We've got a similar deal in tow present.

700k at bankwest - all up consolidated rate 6.95 ongoing with the switch fees waived vs nab 6.77% plus 395 pa

Superior product? For me its line ball as both variables with offsets so it just boils down to an issue of cost as you have noted

With the lmi - youre also right - if you go to refinance down the line without 20% equity then lmi would be payable again.

Peter's right though - both for service need some work.

Slickest back office for me still remains to be cba though. Every lender is still playing catch up with them.

 

[BuyThat]

Hi

I currently have a dilemma and have been offered the following loans:

Bankwest:
6.90% for first 3 years, then reverts to much higher rate of 7.58%. I spoke to the bank manager though about this and she assured me that she could switch me to the Premium Loan (rate of 7.10%) and waive the transfer fee, however she can't put that in writing.
$15 monthly offset fee
LMI of $9,150 capitalised onto loan

NAB:
Offered 0.8% discount off standard variable rate for life of loan - 6.87% due to me complaining about service.
Annual fee for first year waived. Otherwise, ongoing annual fee of $395.
LMI of $8,668. Only half of which can be capitalised.

Now long-term wise NAB is the better offer, however in the short term the Bankwest one is better for me as I can capitalise all of the LMI (freeing up cash) and I am a current customer. I calculated only $100 difference (NAB's favour) between NAB and Bankwest over the 3 years.

I was thinking after the 3 years I would definately shop around again, however am worried that I would be hit with another LMI premium if my LVR is not greater than 80%.

What should I do? I really would prefer to have the extra $4k cash (if going with Bankwest as LMI fully capitalised) sitting in the offset account, but should I really be looking at the bigger picture.

Cheers

Depending on loan amount you can get discounts of 1% with LMI cap. I'd try ANZ. I use them often for my customers and back end is from my experience is exceptional.
Cheers
Rod

 

[Peter_Tersteeg]

ANZ can be very good and in some cases they're very bad. I don't have any issues with their service, but their policies can be very conservative at times. Don't even bother if you're a contractor of any description.

Their pricing policies are fairly compeditive. Just about anything earns a 0.8% discount at the moment and it is easy to get considerably more if you're borrowing $500k or more.

 

[Rolf Latham]

Hi SB

A few qs pls, more to come subject to the answers below.


1. What is the loan amount and the LVR pls

2. How much cash buffer do u have left available after the settlement

3. If and when will u turn the place into an investment property


ta
rolf

 

[superbird]

Hi SB

A few qs pls, more to come subject to the answers below.


1. What is the loan amount and the LVR pls

2. How much cash buffer do u have left available after the settlement

3. If and when will u turn the place into an investment property


ta
rolf

Hi Rolf

1. Loan amount $354,000 + LMI. NAB will lend $358,000, Bankwest ~$362,000. LVR is approx. 94%. Interest only terms for 5 years.
2. $11k cash buffer after settlement
3. Property will be investment from day 1. However, will live in it for 6 months commencing from the 11th month for stamp duty exempetion and FHOG.

Thanks

 

[Rolf Latham]

Hiya SB

On that basis Id be tempted to look hard at BWA to 95 % with capped lmi .........the extra buffer and further investment leverage may offset the smallish increase in LMI

I dont know yur numbers in detail, but suspect the LMI would go up by around 1800 to 2000 for a signicant extra cash retention, increasing your risk margin.

I assume your 94 % approx LVR is with LMI, so the above idea would take u to around 97.6 % LVR

Again, just general ideas, choose with care

ta
rolf

 

[superbird]

Hiya SB

On that basis Id be tempted to look hard at BWA to 95 % with capped lmi .........the extra buffer and further investment leverage may offset the smallish increase in LMI

I dont know yur numbers in detail, but suspect the LMI would go up by around 1800 to 2000 for a signicant extra cash retention, increasing your risk margin.

I assume your 94 % approx LVR is with LMI, so the above idea would take u to around 97.6 % LVR

Again, just general ideas, choose with care

ta
rolf

Hi Rolf

Definately prefer the extra cash, however in 3 years I would have to consider refinancing as the BWA deal would become too expensive once the honeymoon period ends. If my property doesn't increase in value until then so that my LVR is 80% I could be up for another lot of mortgage insurance and would pretty much have to stay with Bankwest and settle with 7.10% - higher than the NAB offer currently but not too significant.

If the property does go up a modest amount in 3 years, then I would be fine as could easily move to other lender's without the LMI barrier.

 

[Rolf Latham]

see thats where I see things differently, and looking beyond the current transaction, but the below depends on ur goals and resources, we only have a smidge of data, and NIL soft stuff on u, so again tread carefully.

Rather than move for a weeny interest rate difference, in 3 or 5 years time with a moderate increase in value, id be looking to do a new loan on THAT security back to 90 % + lmi with BWA pay a little more in LMI ( if any) and use that new money to gear into your next IP or PPOR

Just food for thought

ta
rolf

 

[Doovalacky]

I was with Bankwest a few years ago and had a similar offer. What eventually happened was the person I dealt with had left during the 2 years supposedly so they wanted the transfer fee etc to change things.