Fair point. Keep in mind also that exit costs include LMI that you need to take up with your new lender. If after 3-4 years your LVR is still >80%, you pay LMI again and do not get a partial LMI refund from your current lender for exiting early. In your case, you don't pay LMI now but you may have to if you refinance later, so your exit cost will be LMI plus the higher interest you appear to be paying now. Not many people have thought about this.
Best discount from commonwealth bank 0.94 off variable rate
- Thread starter tamugrg
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Fair point. Keep in mind also that exit costs include LMI that you need to take up with your new lender. If after 3-4 years your LVR is still >80%, you pay LMI again and do not get a partial LMI refund from your current lender for exiting early. In your case, you don't pay LMI now but you may have to if you refinance later, so your exit cost will be LMI plus the higher interest you appear to be paying now. Not many people have thought about this.
From what I can see- what limitations?
80% LVR @ 6.58%, or up to 95% @ 6.69%.. Offset, kitchen sink, tracks the RBA rate for 5 years, no fees...no exit fees. Did I miss something? What Limitations? Cant see how this is a "limited" offer or product in any way??
Seems it has an awful lot more to offer than the UBank product, and just about everything the major banks offer at a dearer rate and with fees- well, for Owner Occupiers and First Home Buyers anyway, because of the extra features. The offset and so forth might not be of much use to investors, but the rate is still pretty fantastic.
My personal view on limitations, particularly for Sydney home buyers:
1. No offset account, hence not suitable for investors who are looking for tax effective structure.
2. Reliability of the 5 year guarantee from FirstMac Ltd is untested. Only time will tell.
3. Only 5 free ATM withdrawals.
4. LVR up to 80% only.
5. Loan value up to $750K.
6. $220 valuation fee compared to nil by competitors.
What's the diff for a Sydney buyer?
1 has a 100% offset account
2 I've contacted them about the RBA guarantee and it is included in the contract plus they aren't a fly by nighter as they have been in the biz for years
4 they do 95% at the 669 rate
5 they will do higher than 750k
Sounds like you didn't do some basic research ?
Here's what I found in writing during my lazy research. Obviously I need to do more to get the basics right.
https://www.loans.com.au/Documents/LCA_Dream Loan Xpress_June'11 special 110531.pdf
More about this new online business for the wise borrowers to make informed decisions.
https://www.loans.com.au/pages/about-us.aspx
The brochure states 100% redraw offset, do I need to say more about the rest of the points?
Big photo of Kim cannon in today's fin review announcing launch of his new online brand. Might be worth googling him, appears to know a little bit about home loans. Not some spiv in a garage.
Are you a competitor mis reporting 'facts'
Credible facts, advice and reviews welcome in a forum like this, the rest not
Go your own research
The brochure states 100% redraw offset, do I need to say more about the rest of the points?
Big photo of Kim cannon in today's fin review announcing launch of his new online brand. Might be worth googling him, appears to know a little bit about home loans. Not some spiv in a garage.
Are you a competitor mis reporting 'facts'
Credible facts, advice and reviews welcome in a forum like this, the rest not
Go your own research
Are you related to Euro by chance?
Are you related to Euro by chance?
scooby is right on all five points. No relation to me by the way, Bradsdad...
To add to Scooby's points;
Maximum Loan size is 750K but there's no limit on the number of loans (They'll do $2.5 million per borrower, but the website doesn't say that- to be fair- but which banks does???)
Let me ask these questions...How much is the annual fee on your pro pack? And are you getting what rate ? Even at a 1% SVR discount of 6.80-6.81% (which very few people would be on) you'd be 23 bpts better off on this product ( under 80% LVR) and 12 bpts better off on 6.69% (over 80% LVR) plus $350-395 better off, annual fee wise(depending on the lender)
And that's if you're one of the lucky few with 1% off the SVR.
The majority of forum readers are probably sitting on low7's or high 6's, with 0.7 or 0.8% discounts plus an annual fee. There may be a lucky few who have negotiated cheaper rates, but it would be a very lucky few. But assuming for a moment that everyone's negotiated 6.81%, here's the bottom line on sub 80% deals when compared with 6.58% (or 6.59% with UBank- its a bloody good rate too- just no offset- shame)
On 300K - this will save you @ $690 in interest + $350-395 in fees-per year
On 400K - $920 in interest and $350-395 in fees
On 500K - $1150 in interest and $350-395 in fees
On 600K - $1380 in interest and $350-395 in fees
On 700K - $1610 in interest and $350-395 in fees
On 800K - $1840 in interest and $350-395 in fees
On 900K - $2070 in interest and $350-395 in fees
On $1mil - $2300 in interest and $350-395 in fees
If you're on 0.8% discounts (@7.01%) - you'll save 0.43%
300K - $1290 interest plus annual fee
400K - $1720 interest plus annual fee
You guys can all do the maths on your individual circumstances- but you see what Im saying?
Implying a once off $220 val fee per property is "limiting" isn't a very balanced or fair representation of the facts. Why focus on a tiny fee instead of focusing on the ongoing repayments and fees? Even for an investor with 4 or 5 investment properties and $700,800K,900K plus in loans, outlaying 4 or 5x $220 for valuation fees to get into this loan and save the sort of money outlined above, per year makes absolute mathematical and financial sense in every conceivable way. I cant see how that's "limiting".
Certainly for an investor with a PPOR, and one or two investment properties- its a no brainer that this will save them bucket loads in interest and free up cash flow to pay down their non deductible debt. For investors with larger portfolio's, its beyond a no brainer to look at this...
Offset- tick
Low rate- tick
Documented 5 year RBA guarantee- tick
No ongoing fees- tick
Big big savings that can be directed to the PPOR debt but retained for future investment if required ( offset looks handy now)- tick
You also may not know that loans.com.au (ie firstmac) assess all existing debts at "actual" repayments ( although when I called UBank to ask their policy- I got tired of 30 minutes of hold music- so someone else here may be able to advise us of how UBank assesses other debt..) so moving your loans here will dramatically boost your future borrowing capacity should you wish to expand your portfolio. Would you rather have your existing debt assessed at 6.58% or higher? (many lenders assess existing debt at their loaded assessment rate-ANZ anyone? and that will make a significant difference to how quickly you run out of borrowing capacity)
Given that loans.com.au allows up to $2.5 mil per borrower ( again- gave up on UBank- can anyone advise how much they'll lend to anyone?) I'd say this would suit the overwhelming majority of buyers or investors (Sydney included) down to the ground. Limiting? I dont think it is, to be fair
With two great deals like loans and UBank in the market- what a great opportunity to spread your portfolio across a couple of lenders (dont give all your property to one lender if you dont have to, and you don't need to anymore because these rates are available from 50K upwards) and make enormous savings. Wealth creation isnt always about capital growth. Its also about smart cash flow management and reducing non deductible debt to establish additional equity. If you're managing repayments in the high 6's and low 7's, then the saved interest available with these products could be redirected to your PPOR , saving you extra years (and lots of dollars) in repayments and creating equity quicker. That's wealth creation too.
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Whats their serviceability calculator like? I suggest its pretty conservative.
If there were investors with the kinds of loans that could make these savings of a couple of k's per year by switching to Ubank, I'd suggest they would be better served in building their wealth by structuring their finances so they can control more assets, and paying the higher rate, and ongoing fees this entails.
An investor with 1mil of loans would save $3kpa switching to ubank, but then wouldnt be able to continue to grow their portfolio.
Another investor could, and make 30kpa compounded.
Many investor's especially starting out would see the waste of having any of their loans sitting at 80% LVR, whatever the interest rate savings.
If there were investors with the kinds of loans that could make these savings of a couple of k's per year by switching to Ubank, I'd suggest they would be better served in building their wealth by structuring their finances so they can control more assets, and paying the higher rate, and ongoing fees this entails.
An investor with 1mil of loans would save $3kpa switching to ubank, but then wouldnt be able to continue to grow their portfolio.
Another investor could, and make 30kpa compounded.
Many investor's especially starting out would see the waste of having any of their loans sitting at 80% LVR, whatever the interest rate savings.
Well I just wrote in my previous post that loans.com.au assesses all existing repayments at "actual" repayments, with no loading. Also said in that post that I can't say what UBank does- the waiting time to get through was horrendous. I guess that means they are getting an awful lot of business, though , so plenty of people must think its a sweet deal
So, in the case of loans.com.au at least - cant see how serviceability could be described as conservative. You cant do better than "actual" repayments with anyone else. In fact most banks load existing repayments. If anything, loans.com.au are quite a lot stronger than most lenders in this regard. loans uses the same calculator as Firstmac, and I know that Firstmac's calc is more generous than all the majors on investment deals... particularly where there are several properties involved. Any broker on here should be able to confirm they are towards the top of the pile for serviceability- especially for investors.
So, coupled with a 6.58% fee free offset, really can't understand all the sceptics about loans and UBank ( no offset , I know). Maths is maths. These deals will save you a lot of money. Why all the debate?
So, in the case of loans.com.au at least - cant see how serviceability could be described as conservative. You cant do better than "actual" repayments with anyone else. In fact most banks load existing repayments. If anything, loans.com.au are quite a lot stronger than most lenders in this regard. loans uses the same calculator as Firstmac, and I know that Firstmac's calc is more generous than all the majors on investment deals... particularly where there are several properties involved. Any broker on here should be able to confirm they are towards the top of the pile for serviceability- especially for investors.
So, coupled with a 6.58% fee free offset, really can't understand all the sceptics about loans and UBank ( no offset , I know). Maths is maths. These deals will save you a lot of money. Why all the debate?
There are quite a few ledners who use the actual repayment rather than a plug rate for serviceability. It doesnt mean their calculator is less conservative. Adelaide bank, Homeside are two examples, off the top of my head.
However, for the point of the debate, lets assume their calculator gives the same results as other lenders. Without a cash out option, and without being able to do purchasers, how does an active investor grow their portfolio (apart from saving an extra $3kpa) with Ubank?
the only use ubank might be for an investor is a place to park for a while when they have finished their accumulation phase, prior to selling.
However, for the point of the debate, lets assume their calculator gives the same results as other lenders. Without a cash out option, and without being able to do purchasers, how does an active investor grow their portfolio (apart from saving an extra $3kpa) with Ubank?
the only use ubank might be for an investor is a place to park for a while when they have finished their accumulation phase, prior to selling.
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I'm looking at refinancing currently for a development so have been talking to a couple banks.
NAB was interesting Despite promises of calls back it took 5 days before a loan specialist contacted me when their system was working.
Bloke was not sure at all how to deal with investment properties income/construction and had to keep referring to supervisor.
After wasting over an hour on the phone they came up with a figure of just $300,000 total loan! Double check, yep that's right $300k only.
Now by my calcs that's about a single income of $57K.
Never mind I earn far more than that, have 1 IP rented and own current residence outright
Another bank this afternoon had no issue with a loan for land. Construction they just want a contract cost for the triplex but in principle not a problem.
NAB was interesting
Despite promises of calls back it took 5 days before a loan specialist contacted me when their system was working. Bloke was not sure at all how to deal with investment properties income/construction and had to keep referring to supervisor.
After wasting over an hour on the phone they came up with a figure of just $300,000 total loan! Double check, yep that's right $300k only.
Now by my calcs that's about a single income of $57K.
Never mind I earn far more than that, have 1 IP rented and own current residence outright
Another bank this afternoon had no issue with a loan for land. Construction they just want a contract cost for the triplex but in principle not a problem.
Usually the case with all lenders
Until the theory converts to reality and in some cases there are some interesting weasel reasons
ta
rolf
I said that- there are a few lenders who are great for investor serviceability. No argument on that. But none of them get close to these online deals on rate. I agree the UBank product is light on features but that shouldnt be an issue for most investors. If it is an issue, loans.com.au's offer doesnt skimp on anything.
The problem is that that there is no guarantee that they will be this cheap as interest rates rise, they may rise higher than the major banks and you may end up with a much more expensive loan down the track.
Huh? There's a 5 year RBA rate track guarantee on the loan... what are you talking about????
Even if you get 1% off CBA or Westpac with zero fees, you wont get within a bulls roar of either 6.58 or 6.59% with no fees.
And need I remind you the only two lenders who raised rates 45 points when the RBA moved 25? Yes sir... Westpac and CBA.
I think you're looking at this all wrong
Huh? There's a 5 year RBA rate track guarantee on the loan... what are you talking about????
Even if you get 1% off CBA or Westpac with zero fees, you wont get within a bulls roar of either 6.58 or 6.59% with no fees.
And need I remind you the only two lenders who raised rates 45 points when the RBA moved 25? Yes sir... Westpac and CBA.
I think you're looking at this all wrong
Haha, that's funny, I should have read the thread perhaps, sorry!
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