Increased Interest Rate

[Oscar]

I have over a million dollars loaned through Aussie home loans at an interest rate of 5.03%. As I was preparing a per approval for a further million dollar loan for a new property my broker advised the best rate I could get was 5.78%.

I enquired why the rate was considerably more than my current rate and he advised the rates I received before the GFC were no longer possible to achieve.

I just can't believe why I'd need to pay a higher rate. Can any brokers comment on this and what interest rate should I expect to pay for a loan of a million dollars for an IP?

 

[Peter_Tersteeg]

There's probably a lot more to this than meets the eye. Through a regular home or investment property loan you should be able to get rates below 5%, even from Aussie Home Loans.

You may want to ask them what the reasoning behind such high rates is. Are they trying to suggest you need a lo doc loan?

Your profile suggests you're in Dublin (Ireland?). Loans for ex-pats aren't a problem and you should still be able to get competitive rates from a broker who understands expat lending.

 

[Oscar]

Thanks PT Bear. My broker has been very good and he seems to have experience dealing with expats asking me quite detailed questions. I also have a very high income and heaps of equity so don't know what the issue is. I'll need to ask him why again.

 

[Terry_w]

for $1mil+ you would be getting around 1% discount with someone like ANZ, but could get evenn lower, around 4.7 to 4.8%

 

[jonmardell]

I have over a million dollars loaned through Aussie home loans at an interest rate of 5.03%. As I was preparing a per approval for a further million dollar loan for a new property my broker advised the best rate I could get was 5.78%.

I enquired why the rate was considerably more than my current rate and he advised the rates I received before the GFC were no longer possible to achieve.

I just can't believe why I'd need to pay a higher rate. Can any brokers comment on this and what interest rate should I expect to pay for a loan of a million dollars for an IP?

i think you need to ask some more questions as this rate is a lot higher than you should be paying for a full doc loan. Their standard variable rate is 5.98% and most of there options are around 4.84% to 4.99% depending on the product chosen.

 

[Aaron_C]

Yeah I doubt the broker would recommend such a high rate unless there was a good reason for it...maybe you only qualify for lo-doc or your income is somehow not acceptable to mainstream lenders. Better clarify.

 

[Peter_Tersteeg]

They could be looking at a lo doc loan for those kind of rates?

Is it an ex-pat loan where you need to borrow more than 80%?

Either of these might explain the rate discrepancy, but in both cases it can be a bit of a specialist scenario and better rates are available.

I can't imagine that a broker wants to give you higher rates especially after starting off with competitive deals. There's probably a lot more going on behind the scenes.

 

[Oscar]

Thanks for the replies. I've gone back with specific questions on the lo doc and expat nature of the transaction. It certainly didn't feel like lo doc given the amount of data I provided for the application.

 

[Rolf Latham]

its lo doc for them sorta rates , and its not bad at that if its 80 % LVR

the core question of course is does it need to be lo doc


ta
rolf

 

[Colin Rice]

Simple, seek a second opinion based on the same scenario and documentation you presented to Aussie!

 

[tobe]

ew, low doc expat, tricky.

 

[Oscar]

Well wouldn't you know it. It was a typo!! All the options he gave me started with a 5 when they should have started with a 4%. My faith has been restored and I'm sorry for wasting people time.

 

[Oscar]

So looks like 4.79 with CBA and 4.84 with Aussie. This is based on 80% and full doc for a free hold IP at 1MM borrowed. Competitive?

 

[Aaron_C]

Competitive I guess but do you really need a pre-approval? Just a waste of time in my books unless your situation is special (which it may well be given your ex-pat nature).

 

[Oscar]

Hi Aaron. The Woolloomooloo wharf property I was trying to purchase was a 66W contract pre auction sale with no cooling off period. Even though I am confident of approval I didn't want to to take any risks. Given I am interested in Another similar property if it comes up I would like to have a so called pre approval. I was slow off the mark last time and missed out on buying in my dream location. Do you think I'm on the right track or too conservative?

 

[Rolf Latham]

Well wouldn't you know it. It was a typo!! All the options he gave me started with a 5 when they should have started with a 4

I had valuations like that

ta
rolf

 

[Aaron_C]

I don't really know your situation Oscar so hard for me to say. Just to say that for most people the main sticking point isn't income, it is usually valuation. This risk is mitigated even more so if it is an arms-length purchase. If it's a potential credit scoring issue, then an application to a non-credit scoring lender would be the way to go. Hence why pre-approvals are pretty useless for the most part.