Hi,
I've been dealing with a mortgage broker to try to get a pre-approval on a loan for a second investment property.
The broker has come back with two options but I have a few questions that I would like to seek advice on before I make a decision...
Current Mortgage on first IP is split into two loans:
- ~$350k - 6.89% fixed (1 year remaining before it becomes variable)
- ~$20k - 5.93% variable (will become ~$60k due to drawing equity for 2nd IP)
I am paying P&I on these loans but also have an Offset account that reduces interest on the variable amount. My intention is to make 2nd IP loan IO.
Broker has asked for the 2nd IP loan, if I would like:
a) ~$320k - 5.64% discounted variable (but no Offset) - $600 setup fee
b) ~$320k - 5.93% variable with Offset - no additional setup fees or annual costs as covered by existing loan
Questions:
- is there any benefit for an Offset on the 2nd loan?
- is it ok to go ahead with no Offset on the 2nd loan to get a better rate, and just put any extra 'savings' into the Offset of the 1st IP?
- do you recommend always going for Offset on all loans? or is one Offset account enough?
- would it be a better idea to get the Offset on the 2nd IP loan and start using that to store any 'extra' money as it will reduce interest on a much larger loan (~$320k) compared to the 1st loan variable portion (~$60k).
- any other advice or things to consider?
I've been dealing with a mortgage broker to try to get a pre-approval on a loan for a second investment property.
The broker has come back with two options but I have a few questions that I would like to seek advice on before I make a decision...
Current Mortgage on first IP is split into two loans:
- ~$350k - 6.89% fixed (1 year remaining before it becomes variable)
- ~$20k - 5.93% variable (will become ~$60k due to drawing equity for 2nd IP)
I am paying P&I on these loans but also have an Offset account that reduces interest on the variable amount. My intention is to make 2nd IP loan IO.
Broker has asked for the 2nd IP loan, if I would like:
a) ~$320k - 5.64% discounted variable (but no Offset) - $600 setup fee
b) ~$320k - 5.93% variable with Offset - no additional setup fees or annual costs as covered by existing loan
Questions:
- is there any benefit for an Offset on the 2nd loan?
- is it ok to go ahead with no Offset on the 2nd loan to get a better rate, and just put any extra 'savings' into the Offset of the 1st IP?
- do you recommend always going for Offset on all loans? or is one Offset account enough?
- would it be a better idea to get the Offset on the 2nd IP loan and start using that to store any 'extra' money as it will reduce interest on a much larger loan (~$320k) compared to the 1st loan variable portion (~$60k).
- any other advice or things to consider?