Is it worth bothering to switch?

[Peter 14.7]

Hi All

With the recent increase of CBA, I am paying top dollar and of course, the option to switch arises.

However I ask, is it worth?

For instance: I can get 6.69% , no fees (read fine print) at New Loan

http://www.newloan.com.au/

But the deferred establishment fee exists unitl 6 years. As I see it I switch my $1M to then and they go up and what can I do? At 1% to get out that is $10,000 gone. 6 years is a long time.

Now NAB is only 7.49% and assuming the usual 0.7% off is that is 6.8% but NAB website is hard to find FEEs tab. Me thinks they hide???

So in short , if you switch what stops NAB or NEW LOAN doing a CBA and gouging.

Anyhow, opinions on NAB, any opinions at all.

thanks Peter 14.7

 

[The Fence]

I could be wrong but it certainly looks to me like NAB is chasing market share before they drive the rates to catch up....they are advertising how good they are with their still lowest V Rate of the big4...and it was CBA's turn to be bad bank followed by the others in an orderly fashion.

Either way were are screwed until competition returns to the banking sector.

I went with CBA 12 months ago cause it was a good deal...not now...!

Ya get that....

Looks like the big 4 are losing their exit fees to squeeze the small banks B/S's and CU's out of more biz.....

Good luck..but at all times you know you should have plenty of buffer against rising rates....no need for me to tell you that...

 

[sash]

Peter

Make sure that you understand the exit costs and how they will calculate when you decide to leave.

I suspect that exit fees will go shortly.....but other fees will replace this.

I for one decided to fix for 2 years for 6.69%. It will cost me about $1000 per loan...small change to give me peace of mind for 2 years and the opportunity to let CBA know I am not happy. They will still have 3 of my loans....might even use this a negotiation ploy!

Hi All

With the recent increase of CBA, I am paying top dollar and of course, the option to switch arises.

However I ask, is it worth?

For instance: I can get 6.69% , no fees (read fine print) at New Loan

http://www.newloan.com.au/

But the deferred establishment fee exists unitl 6 years. As I see it I switch my $1M to then and they go up and what can I do? At 1% to get out that is $10,000 gone. 6 years is a long time.

Now NAB is only 7.49% and assuming the usual 0.7% off is that is 6.8% but NAB website is hard to find FEEs tab. Me thinks they hide???

So in short , if you switch what stops NAB or NEW LOAN doing a CBA and gouging.

Anyhow, opinions on NAB, any opinions at all.

thanks Peter 14.7

 

[myoung]

Peter, FWIW, I threatened to move my loans from ANZ a few years ago.
They increased my discount on standard variable as a result(from 0.7% to .82%). Worth a try if you have a substantial amount with them ( I had about $650K at the time). Might even make staying more cost effective.

 

[Rolf Latham]

Hi Pete

Newloan is a mortgage managed ING product I think.

Firstfolio, they are one of our panel lenders............but we dont use them a whole lot.

Most of the majors now have a known quanity def so that will make them a lot more accountable that those that have % based defs

ta
rolf

 

[virgo]

Bankwest

Hiya

Am considering a switch from CBA to BankWest...part of the reason is CBA was making the top up a VERY painful process.............(odd thot BW owned by CBA)

Apparently BW 's Premier Loan product has no exit (deferred establ costs)!

hope this helps!

I HATE CBA!!!!!!!!!!!!

 

[Rolf Latham]

Hi Virgo

Many lenders dont have a def now......

ta
rolf

 

[Simon]

Now NAB is only 7.49% and assuming the usual 0.7% off is that is 6.8% but NAB website is hard to find FEEs tab. Me thinks they hide???

So in short , if you switch what stops NAB or NEW LOAN doing a CBA and gouging.

Anyhow, opinions on NAB, any opinions at all.

thanks Peter 14.7

I am with NAB. I pay an annual fee of $375 and get the discount loan rate and no fees. There are other benefits too. One of which is my personal banker whom I can email or call anytime and she never lets me down.

I find I only ever visit a branch now when I have a cheque to bank.

I read that they have followed the lead of the other three banks to raise their rate higher than the recent rate rise. But there are other tangibles besides the rate. I am not looking at moving - tried a discount lender once - Homepath. It was awful from start to finish.

Cheers

 

[tom32]

Is the effect on your credit history also something to consider when switching. I know investment loans are different to credit cards but I remember seeing some poor bugger who took up each of the introductory rates he got in the mail on credit cards and now cannot get a loan because his credit history has been accessed so many times.

It is OK to shop around all you like for the best rate on deposits but for loans I fear you risk hurting your future prospects if you switch all the time.

Even from a pragmatic angle if the prospective lender sees you have switched 3 times in as many years they are not really going to want your business anyway.

 

[luckyone]

Is the effect on your credit history also something to consider when switching. I know investment loans are different to credit cards but I remember seeing some poor bugger who took up each of the introductory rates he got in the mail on credit cards and now cannot get a loan because his credit history has been accessed so many times.

It is OK to shop around all you like for the best rate on deposits but for loans I fear you risk hurting your future prospects if you switch all the time.

Even from a pragmatic angle if the prospective lender sees you have switched 3 times in as many years they are not really going to want your business anyway.

Sorry to take this thread on a tangent, but why is this? I mean why does your credit rating take a hit just for making a loan application???? Surely it shouldn't happen until you actually take up the loan. I hope that positive credit reporting does eventually get up so that we don't have to put up with this crap anymore.

 

[Rolf Latham]

Hiya

An enquiry on your file is treated by most systems as that, an enquiry.

A high levle of enquiry activity ( applications) on your file is a "reliable" pre cursor for a poor credit outcome.

yeah, I know its bad, lenders should treat people on their merits per se, but all we can do therefore is to be aware of and play by, their rules.

Anything else is risky business

ta
rolf

 

[Blacky]

An enquiry on your file is treated by most systems as that, an enquiry.

A high levle of enquiry activity ( applications) on your file is a "reliable" pre cursor for a poor credit outcome.

Rolf
How long to enquiries on your file stay there for?
I applied for a loan earlier this year and the bank successfully lodged 9 enquiries on my file (thanks) - all for the same loan!

Any idea how long until they will disapear?

Thanks

 

[Rolf Latham]

5 years plus

However, they are often disregarded after 12ish months.

If anew loan goes to a lender that works off striaght system credit score you culd have an issue, because no amount of explaining can over ride the black box.

What I suggest is you chase the 9 hit lender to reduce these to one or 2. I would do this purely as a matter of course. Ask them for a simple WHY ?

If they say they cant do it, come back to us here and we will have a look at it via some diff channels

ta

rolf

 

[tom32]

Rolf
How long to enquiries on your file stay there for?
I applied for a loan earlier this year and the bank successfully lodged 9 enquiries on my file (thanks) - all for the same loan!

Any idea how long until they will disapear?

Thanks

that is atrocious. I guess anyone actually looking at this will see it for what it is when it is all from the one institution for the same amount aroudn the same time.

I got knocked back for a car loan many years ago by combank. I applied instead through my credit union a few weeks later and they rang me during the process and asked if the loan I had applied for with the combank for the same amount had been approved?

I guess this is a question for Rolf; can they see, when running a credit check, whether the funds have actually been approved. i.e. how can the bank 2 years later tell if the 9 credit checks were for one transaction or whether they were for 9 seperate transactions all approved and funded? If they were all around the same time and for the same amount this would be a hint, but is their any way of them knowing for sure? Say they were three checkes over 3 years?

No wonder people stick with the one loan in Australia for life, or I guess if you are going to move do you homework first, exit fees could be the least of your worries.

 

[simo74]

I guess this is a question for Rolf; can they see, when running a credit check, whether the funds have actually been approved. i.e. how can the bank 2 years later tell if the 9 credit checks were for one transaction or whether they were for 9 seperate transactions all approved and funded? If they were all around the same time and for the same amount this would be a hint, but is their any way of them knowing for sure? Say they were three checkes over 3 years?

.

No they cannot see if a loan has been approved, only that an enquiry has been made. However this will change in the future with the introduction of "Positive Credit Reporting" next year.
Also the big banks tend to only make one call to the credit reporting agency. It may be assessed by the bank a number of times in a week or so however there is only ever 1 enquiry made. Banks store the details of the credit file for a short time. There is no need to make additional enquires for the same loan application. They may force another enquiry if they suspect the borrower is making multiple requests for credit at other institutions

 

[Rolf Latham]

Banks store the details of the credit file for a short time. There is no need to make additional enquires for the same loan application. They may force another enquiry if they suspect the borrower is making multiple requests for credit at other institutions

This does depend on the lender.

Most auto systems will make an enquiry every time a loan decision is rerun for a change, ie, removal of a borrower or guarantor, product change etc

In theory +ve credit should work to suit the better borrower better, but it will once again be used to make "better credit decisions".

These are rarely for the benefit of the borrower in the investment mind set, but can be a better decision for those that have traditionally had credit issues. Gov feels they need better protection, hence the idealogy of the NCCP

ta
rolf

 

[simo74]

This does depend on the lender.

Most auto systems will make an enquiry every time a loan decision is rerun for a change, ie, removal of a borrower or guarantor, product change etc

In theory +ve credit should work to suit the better borrower better, but it will once again be used to make "better credit decisions".

These are rarely for the benefit of the borrower in the investment mind set, but can be a better decision for those that have traditionally had credit issues. Gov feels they need better protection, hence the idealogy of the NCCP

ta
rolf

Your contacts within the bank may be telling you that this is the case Rolf however i can tell you this is not correct in most instances. I'm employed by one of the "Big 4" and work very closely with our credit decisioning team. Frontline staff may believe this is what occurs however i can ensure you that only 1 enquiry is made in most instances. Product change is an exception.

 

[BayView]

Peter, FWIW, I threatened to move my loans from ANZ a few years ago.
They increased my discount on standard variable as a result(from 0.7% to .82%). Worth a try if you have a substantial amount with them ( I had about $650K at the time). Might even make staying more cost effective.

Dang; beat me to it.

I was going to suggest to hit the existing sheisters with a bigger discount to keep your bidness.

But, the catch is you have to be big enough to be worth keeping I suspect.

 

[Rolf Latham]

Your contacts within the bank may be telling you that this is the case Rolf however i can tell you this is not correct in most instances. I'm employed by one of the "Big 4" and work very closely with our credit decisioning team. Frontline staff may believe this is what occurs however i can ensure you that only 1 enquiry is made in most instances. Product change is an exception.

meh.............I have long since given up relying on what any bank person tells us where we have to act in reliance of that information with substantive or material issues that can influence credit decisions now and in the future. With that I dont mean you, I mean the industry generally.

Its just to risky.......the recent St George LMI and WLMI mergers are just one really good example where even senior level PR and credit coaching staff had no clue for weeks, yet credit decisions were being made that were affecting clients poorly. To the lenders' credit, after a little bit of encouragement, the lenders removed the offending enquires.

We have Veda in house, and suggest our clients pay for the ongoing notification service that is available............keeps the brokers and lenders honest in terms of Service level expectations.

That data tends to show that many a time a decision is re run, a new inquiry is lodged, even if the previous enquiry is 24 hrs old.

While I appreciate not all lenders will have that approach, and your employer may be one of those exceptions, the "unintential abuse" of the CRAA system by many lenders needs a major legislative overhaul.

If we think mortgage backed loan lenders are bad, the personal loan and chattel mortgage folk are 3 times worse, because they empower people to access their systems, but dont explain ( or maybe understand ) that 4 enquiries for boat loan x with one week is really bad for a client file when they then want a mortgage insured housing loan.

ta
rolf

 

[RumpledElf]

Am considering a switch from CBA to BankWest...part of the reason is CBA was making the top up a VERY painful process.............(odd thot BW owned by CBA)

I HATE CBA!!!!!!!!!!!!

I'm having no end of strife with CBA. First they give us an overly low valuation and charge us $8k after delaying settlement for 2 weeks. Then they change their lodoc policy so we can't get a loan topup - and all our pain with them was due to trying to avoid discharge fees so we could just get a topup - if we knew they'd changed their policy (our broker assured us it hadn't changed) and they had valued our other property when they got it instead of leaving it at $0, we would still have that $8000.

Then they say we can get a fulldoc topup but they'll only accept all our non-business income (which is of course too low to get the topup), and then they refuse to revalue the house despite one of their phone staff saying they will (which means I have to pay for an independant valuation) and refuse to give us our $8k back so now we're going to have a loan on an investment property with the repayments less than half the rent will be AND we have no way of refinancing to get any more money out of that loan (even the 8K).

We got a new broker and are switching to ANZ. I don't know where we are going to get the exit fees from, we only have $80k and we need to come up with quite a few more $1000 to cover all the switch and connection fees. The missing $8000 we budgeted for and is a lot of money to just lose because an idiot at the bank doesn't tell the valuer we're not at 80% LVR and we were uncrossing the loans .... the valuation came in to the dollar at what we needed to keep the loans crossed.

I'm a bit pissed off that we've run out of avenues within CBA to complain about this.