ING Direct loan 5-year fixed

I came across a post in another forum about this article: http://www.propertyobserver.com.au/...es-his-investment-property-mortgage-rate.html "John Symond fixes his investment property mortgage rate"

I find this ING product to be enticing.

5 years 4.89% fixed when split with the Orange Adv full offset account variable 4.83% (LVR<80%, $250k+ total loan amount).

I am thinking of I/O, splitting between what I think the forecast un-offsetted balance after Year 5 (this balance becomes fixed split) and the rest to variable, to be progressively offset.

Is it possible to get a lower discounted variable rate through brokers, with the bargaining argument that I won't be going away in 5 years because of the split?

What are your thoughts? I want some ability to hedge against future rate fluctuations but at the same time be able to use my savings as offset.

Let's assume I have no plans of selling/refinancing in the next 5 years, so let's disregard the lack of flexibility for 5 years.

This is for a PPOR property.
 
If rate is the single most important thing to you then ING's pricing is very sharp.

A broker won't be able to get a further discount on a $250k loan.

P.s - for cheap rates, check out suncorps current offering. Particularly the variable.

Cheers

Jamie
 
Sorry, I don't know how knowledgeable brokers are supposed to be but I'm dealing with a broker for the very first time and he suggested I go with the ING variable rate cause "it was good for me".

Asked him about the ING 5 year rate and he just said we change later. Is that because you get a better commission on a variable than a 5 year rate?

He wasn't able to tell me why the variable "was good for me" or give a comparison of the advantages/disadvantages. Should I be looking for another broker or is this how brokers operate?

My initial brief was 5 year IO fixed rate with offset facility, refinancing.
 
Sorry, I don't know how knowledgeable brokers are supposed to be but I'm dealing with a broker for the very first time and he suggested I go with the ING variable rate cause "it was good for me".

Generally you'd want to be dealing with a very "knowledgeable" one :)

Asked him about the ING 5 year rate and he just said we change later. Is that because you get a better commission on a variable than a 5 year rate?

No - commission is the same.

He wasn't able to tell me why the variable "was good for me" or give a comparison of the advantages/disadvantages. Should I be looking for another broker or is this how brokers operate?

Yes you should.

My initial brief was 5 year IO fixed rate with offset facility, refinancing.

You can't link up an offset to a fixed rate - so at the very least you should leave a portion of the loan variable. Five years is a long time to commit to a fixed too - so think carefully about this.

Cheers

Jamie
 
Sorry, I don't know how knowledgeable brokers are supposed to be but I'm dealing with a broker for the very first time and he suggested I go with the ING variable rate cause "it was good for me".

Asked him about the ING 5 year rate and he just said we change later. Is that because you get a better commission on a variable than a 5 year rate?

He wasn't able to tell me why the variable "was good for me" or give a comparison of the advantages/disadvantages. Should I be looking for another broker or is this how brokers operate?

My initial brief was 5 year IO fixed rate with offset facility, refinancing.

These are very easy question to answer if the broker understands your needs and goals. For what it's worth, your brief is product related, not goal related. A simple, "What's next," type question would bring this out however.

Advantage:
Fixed rates are a great tool for locking in your cash flow and right now they're about as cheap as they've ever been (keep in mind they can still drop, nobody really knows).

Disadvantage:
You're committing yourself to that loan with that lender for the duration of the fixed period (in this case, 5 years). You can get out of fixed rates, but it could cost you.

It's essentially certainty verses flexibility.

Keep in mind that ING has very conservative affordability policies. That's probably not an issue right now, but if you decide to fix and want to access your equity in the future, they may not be willing to allow you to do that and you may need to wait until the fixed rate expires before you can move the property to a lender that will allow it.

Without understanding your specific requirements it's not possible to suggest if you should or should not fix. If your existing broker can't talk you through this, (a) they don't understand your needs well enough and (b) the probably don't fully understand the implications of what they're suggesting. I'd suggest it's time to find another broker.

Incidentally whilst lenders do pay the same amount regardless of the type of product, a fixed rate loan does guarantee that they will receive their trail income for at least the fixed term.
 
Hi mate,

I would back up the above responses and agree. Commission wise all banks will be the same or similar. 5 year fixed ING is market leading so it will be hard up to find a better fixed rate unless you go for a lower term.

I would fix for as long as you can with rates being under 5%.
 
I would fix for as long as you can with rates being under 5%.

That is pretty blanket advice without knowing the posters medium term plans don't you think?

I would usually advise to think about a shorter term than 5 years because it is such a long time and the break costs if you want / need to get out can be huge. I heard of a few $50K + break costs in 2009 (luckily none of my clients) but our brokerage did see plenty of $5K -$10K ones and I copped at $3K one myself personally. Think long and hard about 5 years.
 
Agree with Marty.

The 5 year fixed has it's place - but it's something I get clients to carefully think about. It's a long commitment - and it's hard to effectively plan that far into the future.

Cheers

Jamie
 
Thanks for the advice everyone.
Strategy is buy and hold, I'm currently refinancing from ANZ's variable of 5.48%. Originally 3 year fixed rate IO in 2001, now P&I. So now want to pull some equity out of the IP to buy more IPs.

Spoke with the broker and he clarified that I would switch the ANZ loan to ING IO 5 year, then have the remaining amount up to 80% LVR of my IP on variable as banks don't allow drawdowns on construction of my new IP to be fixed. Not that I have any constructions at the moment but I guess he is looking ahead (I'm assuming).

Why couldn't he explain this to me in the first place. Maybe he was busy. But makes sense now.
 
Last edited:
ING and Fixing for 5 years are a suicidal combination - tread carefully. Ing have very conservative servicing and cash out. This can be painful if you decide to pull equity against the property within the next 5 years.

I can't see all the details but I'm betting its a bad call.
 
Very conservative servicing = they will not lend you nearly as much money as other lenders. Remember different lenders lend different amounts of money based on your income and liabilities.

Lenders like ING and Bankwest are on the lower end of the spectrum and lenders like NAB and Macquarie are towards the end of the spectrum. You need to use the right lenders at the right time. Using a lender like NAB too early in your portfolio will hurt you (as an example NAB will take actual existing loan repayments of other financial institutions whereas they they will take benchmark/higher rates on existing NAB loans).

Conservative cash out policy = combination of limiting the amount of funds they will allow you do pull from the security and added/unnecessary paperwork in comparison to other lenders will far more relaxed cash out policies namely Macquarie and Westpac.
 
Putting aside the issues with a 5yr fixed rate, to sacrifice on policy and servicing over .1% rate compared to some of the other 5yr fixes on the market, is a bit short sighted.
 
Hi Shanin

Can you please explain what you mean?

Cheers
D

I've covered why ING and long term fixed rates can be a dangerous combination in my previous post, quoted here.

Keep in mind that ING has very conservative affordability policies. That's probably not an issue right now, but if you decide to fix and want to access your equity in the future, they may not be willing to allow you to do that and you may need to wait until the fixed rate expires before you can move the property to a lender that will allow it.

Fixed rates are fine if you want set and forget and you're absolutely certain that you won't need to do anything finance related to that property.

If there's any chance that you might want to perform a top up, access equity or anything like this with relation to this property, I would not suggest fixing with ING.

You may also want to consider simply staying with ANZ. Whilst they would still have the same future issues with ING regarding fixed rates, you're on a very high variable rate at the moment which can be rectified with a phone call. ING may be a little cheaper, but possibly the difference is not that great and it may be more cost effective to simply renegotiate than to move.

Either way, I think you need to seek further advice. What you've been told so far probably isn't taking into account your future needs.
 
Davimin:

If you're in Melb I'd recommend you to talk to Peter T.
If you are fine with phone and email and no need for face-to-face contact you can contact Jamie.
Since you're in Syd why don't you contact 1 of Shahin Rolf or Marty? ;)
 
So how do you rate their turnaround time? IS ING Direct quick enough to settle within 15 business days?

Would it be better if get some sort of pre-approval first, then when the 15-day settlement date is triggered it's faster for them to complete?
 
I'm not going to say that it can't be done, but generally you'll likely get the approval within 1-2 weeks with most lenders. From application to settlement in less than 30 days is asking for trouble.
 
I'm not going to say that it can't be done, but generally you'll likely get the approval within 1-2 weeks with most lenders. From application to settlement in less than 30 days is asking for trouble.

so it would be a good idea to put it an application before the 15-biz days settlement period is triggered?
 
so it would be a good idea to put it an application before the 15-biz days settlement period is triggered?

Why are you running on a 15 day settlement, that's incredibly unusual. 30 day settlement is the standard 'short settlement', with the rest floating between 45-60 days.
 
Top