CBA Mortgage Advantage

[Nards]

Hi,
This is my first post so I hope it works out ok! I am also very new to the property investment game, and am still trying to get my head around it all, especially the finance side of things...

We are applying for finance via a MB for our 2 IPs. Our first IP (previously our PPOR, currently with a P & I loan) is valued at 480K (owe 120K), and the second just bought for 360K, borrowing 100% + costs.
We have asked the MB to recommend finance requesting interest only loans, that are not cross collatorallised, with a LOC and offset acc. against the 1st IP.

The MB has recommended the CBA Mortgage advantage loan, with the associated concessions etc. He says he uses CBA for 70% of his loans - does this mean he is getting a better commission from them?

After doing a search of this forum, there isnt much good to read about CBA, esp. customer service. The big banks seem to have reasonably similar products, in terms of rates/discounts...How would you rate the CBA package itself, as compared to others such as the ANZ breakfree, Westpac premium etc and why?
Thanks for your thoughts, Nards

 

[Rolf Latham]

Hiya Nards

The MAV package per say is good, and the underlying products are ok, though somewhat clunky, especially their offset acct, and lets say you want to alter loan amounts but not loan limits, you need to either do a full loan app or pay a 300 variation fee on top of the

The likelyhood that the MB is getting more comm from CBA is unlikley, though they do pay a volume bonus which some aggregators pass on to the brokers. I have always seen that bonus as pain money.................

In our case we use CBA sparingly and in particular circumstances.

Id be very poor and have no hair left if 70 % of my loans went to Commbank . Time over return analysis has shown we spend almost twice as much time to settle and manage a CBA loan than the average of the others.

In general, the Westpac client and broker service levels are better, and the product is more flexible, though you usually pay a little more in rate.

Id also rate ANZ Breakfree ahead of Commbank in many circumstances

ta
rolf

 

[Spectre]

Hi Nards

Mortgage Advantage (MAV) isnt a loan, its a package where you pay 300 pa. for the 'benefits' of it. I dont know if he brought up equity addvantage, which is their umbrella facility. If he goes to put you into an EA then this will x coll all your loans / properties.

The pros of the package is that they automatically discount the fixed rates and it waives the monthly fees, estab fees on your loans and so on, and if you go back in the future will continue to do so

Essentially it is a good package and in a lot of cases sells itself when you compare package vs package its probably cheaper than most and you get a little bit more, but in that cba will then chase your insurances and so on to make it up.

I dont see why he wouldnt disclose commissions paid by banks to you, I know some of the MBs on the forum have posted the commission schedules they get on various posts around the place. For me, cba pays .77% upfront and .275% trail, so middle of the pack.

With CBA they are often fairly competitive on price and rate but as you've noted sometimes they do fall over on the service side. They are supposed to be having an 'everyone is welcome' regardless of channel push, so you could always ask him to take you to your local branch to meet the manager... apparently thats happening from some video I saw at their offices last week.

As a sidenote with new money over 500k cba will go to .8 off of variable/loc. shouldnt matter if they are x.coll or not. so i dont know if you've done that but you might look at setting up a little line of credit you wont use just to get the discount if you arent already.

Only other comment I could say is sometimes its nice to have your stuff spread around a bit but there are worst banks you could end up with.

Why don’t you get a second opinion from another MB and see what they say?

 

[Rolf Schaefer]

Nads,
based on my experience (and of course the experience of my clients) I would prefer the Westpac Premier Advantage Package or the ANZ Breakfree Package over the CBA package for the following reasons:

1. Customer service, hardly to be found with the CBA
2. Package flexibility; no switching fees, etc
3. Offset account. With both ANZ and Westpac you get a 100% transactional Offset account (all-in-one account type); with the CBA you need to operate 2 accounts (Streamline and MISA) to achieve the same. Very often do clients forget to offset with the money sitting in the Streamline account; however; only funds in the MISA account are offsetting.

Just my 3 cents

 

[Peter_Tersteeg]

There's nothing wrong with the MAV package, it stacks up well against other professional packages.

The one thing it doesn't have if a proper offset account. There is an account which offsets your loan, but if you're thinking of using it to live out of, forget about it, it's not structured that way.

Secondly I agree with Rolf, I'd have a lot less hair if I put most of my business with the CBA. I've generally found there's very little they do which I can't get as cheaply elsewhere, with better service, an easier and more reliable process and more regard for both the customer and the broker. I usually use them as a lender of last resort.

If your broker won't disclose commission rates to you, you may want to look more closely. In some states, brokers must disclose commissions unless they only have a very limited offering. Most clients don't care what I get paid, as long as it's not what's driving my proposals.

 

[Qlds007]

Hi Nads

Totally concur with what has been posted about CBA.

If you want grey hairs and no one ever to ring you back then they are the Bank for you. Me i prefer a bot of service and to be able to negotiate for my clients.

Away from the lender he is using i am more concerned about the set up he has established for you. Why the P & I Loan on the IP (fully understand it was original a PPOR but should have been interest only with offset A/c anyway).

Also wonder how he is going to Un X the 2nd IP from your PPOR. CBA dont like letting go of security unless they have to.

 

[Nards]

Sorry..I probably havent explained myself properly...we are refinancing the original P & I loan (was our first home loan with Keystart in WA) on our old PPOR to IO with this MB..so in the end we should have -
IP1 Interest only, with LOC and offset account (although the MB tells me I have to organise the offset myself at branch level as he is unable to, illegal apparently?? not too sure about that part of it...)
IP2 Interest only.

We have no PPOr at the moment (in lucky position of employer providing housing..)
We has asked him to ensure they are not x-coll..I guess we will have to wait and see if CBA will accept or not..
Do you think that is a good way of setting up for long term growth of a property portfolio (buy and hold is the plan...)
Cheers Nadia

 

[NOT 2 L8]

Hi Nards,

Unless you have already signed And committed with the CBA deal, it may be an idea to get one of the guys here to have a look at your situation. It can't hurt and second opinions are a valuble tool.

Cheers Chrisv.

(The old Man)

 

[Peter_Tersteeg]

Your broker is going to have fun with the offset account. The branch will tell you it's up to the broker to organise as it's a Colonial loan.

Again, keep in mind it's not a transactional offset account. There's a minimum redraw amount, so you can't use it for day to day living expenses. It's better if you consider it like a long term savings account.

 

[Spectre]

Nards/Nadia

Your broker should be able to download the MISA application off of the cba broker website as I just did. Its not available on the normal website.

You'd just fill it out and return it with your documents with a letter asking for them to set it up... that is, IF you are going to run with CBA at the end.
you'll need one per account.

If the broker thinks you have to go in and get advice re the MISA/offset then I think hes getting his banks mixed up as your front counter staff there probably dont have a clue how a misa works vs a redraw and think its more or less the same thing. If you looked at the webpage you can ring them over the phone and do it and they'll post the forms out to you
http://www.commbank.com.au/personal/transaction/misa.asp

If he doesnt give you one then you just go into a branch and ask for one and they'll have them on stock.

Re the X Coll question, if the loan is supported by the property on a stand alone basis to 95+LMI cba will probably end up running with it, end of the day they still have your houses as security either jointly or seperately, which is why brokers are anti x coll.

But there are more options than just CBA, and no bank can be all things to everyone. It might be the case that your broker isnt necessarily 'wrong' either. But I'm just wondering if there is a trust factor somewhere along the line...

 

[Nards]

Thanks to everyone who has given so much insight into the ins and outs of the various packages. I'm thinking we need to reassess the situation, and look a little closer into the various packages, and get advice from differnet broker, as it seems this one maybe doesnt know as much about property investment as we would like...as is repeated so many times on this forum, having a good team around is imperative to you success..

Now, however we have another problem in that we have wasted nearly a week of our settlement period. Unfortunatly we have learned another lesson, in that we should have asked for a longer settlement. Is this going to be a problem? We have 21 days for finance, with 30 days from date of contract for settlement..can this be pushed out any?? Is it going to cost us?

Once again, thanks for your input,
Nadia

 

[Qlds007]

Hi Nadia

You are in Qld so 21 days less a week is very much doable.

All you would do is after the finance has been approved advise the vendor that you will go unconditional on the basis that settlement is pushed backwards. There is no cost for doing this although the Vendor will need to agree to it.

To be honest if you are trying to tee up a refinance within the 30 day time frame as well i think you will find this difficult as it could take most lenders 3-5days to issue mortgage documents and your Solicitor is going to want to make sure these are correct before going unconditional.

In saying this we have done things a lot swifter.

 

[Rolf Latham]

Just dont go to St George right now

The core challenge isnt the incoming financier, its the outgoing bank that often causes the headache.

ta
rolf

 

[alexlee]

So what is the minimum withdrawal from the CBA offset account? And are withdrawals free?
Alex

 

[JIT]

$500 withdrawals, free I believe.

 

[Nards]

A quick update - have spoken to my existing broker, and after much discussion, and him trying to persuade me to continue with CBA, I have got him to set up for us to apply for the Westpac Premier Advantage...he wasnt very happy, and I can understand that he has probably spent a good amount of time doing the CBA application. He wasnt at all familiar with the Wespac or ANZ packages and spent a couple hours looking into the way they were set-up etc, and came back to me sounding somewhat happier, and agreeing that they were good packages, but a little more expensive. He was quite adament that CBA had much improved their customer service (as explained to him at his recent attendence to CBA training days...), so good luck in that department to all the CBA customers out there!!
So we are on track again and hopefully will end up with a product that will work well for us. Has been a learning curve, certainly have a much better understanding of loans and their components that when I started this, so its not all bad...
Just hope we can pull it all together in time for settlement now!
Nadia

 

[gooram]

$500 withdrawals, free I believe.

I've been investigating changing our PPOR LOC to an offset (all with CBA).

So just to clarify, an offset with CBA would involve a MISA account holding your savings, then a streamline account for day to day usage, to which you would have to periodically transfer money to, from your MISA account?

 

[JIT]

Yes gooram, that is basically it. Just need to keep a minimum in your streamline acct, so more of yours cash if 'offsetting' in MISA. To pay off interest/principal though it has to come out of the streamline account, so each month before it is due make sure there is enough cash in the streamline acct to pay it via direct debit, then keep some for day to day use there, and rest off to MISA. No direct debits from MISA or ATM/credit card/cheque book with this account (like an ING savings account).

MISA is still an offset account and works, but maybe a bit more hassle with the added streamline acct. I don't think its really a huge problem though, particularly if you get a good rate.

GSJ

 

[yo yo ma]

With the CBA (Colonial) Wealth (MAV) package which costs $300pa, you get a gold visa or mastercard for no annual fee (normally $114) plus additional card (normally $30). This has been good for "commaward" points which you can use or transfer to Qantas FF.

We buy everything possible on the credit card, & pay from the MISA each month... Is a bit of a hassle having to transfer from the streamline to the MISA & back. The figures given of $500 & no fees are correct.

The main problem is the website is 2-3 days behind your transactions... The money comes off the credit limit immediately but each individual transaction takes time to come up on the screen.
Steve

 

[gooram]

Yes gooram, that is basically it. Just need to keep a minimum in your streamline acct, so more of yours cash if 'offsetting' in MISA. To pay off interest/principal though it has to come out of the streamline account, so each month before it is due make sure there is enough cash in the streamline acct to pay it via direct debit, then keep some for day to day use there, and rest off to MISA. No direct debits from MISA or ATM/credit card/cheque book with this account (like an ING savings account).

MISA is still an offset account and works, but maybe a bit more hassle with the added streamline acct. I don't think its really a huge problem though, particularly if you get a good rate.

GSJ

I assume though, that you can direct debit INTO the MISA account? Or do you have to get salaries and rents paid into your streamline, then xfr this over to your MISA?