Is there value is being loyal to a bank ?

[Tonibell]

We have been with CBA forever and have everything with them.

They provide a very experienced personal banker that we have used for years and have been very happy with.

For a long time we did't have much in the way of banking requirements as we paid off the PPOR a long time ago and just invested in shares with Commsec.

In the last 5 years our banking needs have changed dramatically and CBA have supported us all the way. However things have grown quite quickly and perhaps we have not gone about them the best way.

The types of things we have with CBA are :

- everyday banking of course.
- SMSF with Comsec direct trading and all insurances.
- margin loan facility (unused at the moment - but has been previously)
- some direct shares through Comsec.
- property loans of about $2.8M at say 65% LVR.
- loans are currently 50% fixed and 50% variable (@ 4.90%).
- loans are crossed against PPOR and 3 x IPs.
- unsecured IPs would reduce LVR to around 55% if considered.
- all insurances for the properies.

We also have another IP that has not been used to secure loans as yet.

Our cash flow is OK I think for servicability (all IPs are dual occupancy and CF neutral overall - give or take). Stable work history and good income - although 2 sets of school fees and associated costs means there is nothing left over.

We are looking at renovations on our PPOR and probably another IP. Normally we would send off some figures and they mail the papers out to

So.... after reading everything here we think we should have a good look at our banking arrangements. We only got the current variable rate reduction (1%) by threatening to jump to another bank a couple of years ago when we became aware of the discounts available.

Seeing the 4.75% etc posted on here is making us wonder whether we are better off having someone monitoring this for us.

So, do we get value for being a loyal CBA customer, or does that just leave us open to a bit of gouging ? How should we go about things from here ?

 

[Aaron_C]

Well ask your existing banker to submit a pricing request to get your other loans further discounted but you would need some leverage for that (i.e. a loan increase of some sort). I got a client a 0.20% discount off his existing CBA loans with just a small $30k increase so it can be done. If you don't ask you won't receive.

 

[Postcard]

In my limited experience of 4 purchases, 1 sale and a couple of refinances the word loyalty should not be part of your business plan dialogue.

The banks are not basing any part of their decisions on your 'friendship' with them. They are making business decisions, not doing you favours. You will only get better deals, for say IR's, if you can find a better deal and threaten them with leaving. (granted IR's are only part of the decision making process)

Having options and being prepared to take them puts you in the right mental space to deal to your benefit, with the bank. "I am going to do this, what can you do to change my mind..."

The one advantage of using the same bank comes from maintaining a relationship with 1 person (if you can) because it can improve the customer service. Convenience of not having to move is also the other.

My experience only...

 

[tobe]

for some banks, being an existing (usuallycredit) customer can have some slight advantages, but in general loyalty has no advantages.

If you dont qualify, bank says no.

If you do qualify an existing customer might not have to provide as much evidence to the bank because the have your details on file already.

Investigate xcoll. It may not be a big issue now, but just as your details have changed recently, it may well be an issue in the future, and its one of those things that can be very dificult to deal with in a hurry.

 

[MatC]

Having worked for a Big 4 for 11 years there are some small benefits on the extremes ie high lvr etc. But generally you are a customer number on a system and unless you ask they won?t offer. Majority of bank revenue is driven by apathy I?m sure!

 

[perthguy]

Well ask your existing banker to submit a pricing request to get your other loans further discounted but you would need some leverage for that (i.e. a loan increase of some sort). I got a client a 0.20% discount off his existing CBA loans with just a small $30k increase so it can be done. If you don't ask you won't receive.

^^^ this, and then have a meeting with a good mortgage broker to see if they can get you a better deal. If so, take the deal back to your bank and see if they will beat it. Otherwise, have a look at the costs of refinancing and see if it is worth it. It might not be worth it now but it might be when the fixed interest period is up.

I have all my loans with one lender but I want another IP and I'm wondering if it is worthwhile splitting the loans and properties across more than one lender. I will run through the options with my mortgage broker and see which is the best way to proceed.

 

[Terry_w]

Doesnt sound like things are structured well. You shouldn't have any loans crossed at that LVR level (or any LVR for that matter). And the rate you are paying is too high.

Also not good to have all of your loans with the one lender and definitely not all your business with the one lender.

 

[jimlenno]

Agree with what others say ... Don't be loyal to banks, they certainly are not towards you!

Re insurance...... I get really annoyed every time I speak with a bank they try to offer insurance, usually way more expensive through a bank even though they say you get a 10percent discount. Definetly shop around on the insurance.

Jim

 

[Jamie M]

Agree with what others say ... Don't be loyal to banks, they certainly are not towards you!

Spot on.

Sometimes it can be a good relationship with the banker which fuels the loyalty - and that's not necessarily a bad thing. However, decent bankers tend to be moved on to other roles - and at the end of the day, there's only so much they can control. They're still at the mercy of bank policy, credit assessors and LMI providers.

Cheers

Jamie

 

[Brady]

Are you relationship managed? If so by which area? Premier/private banking?

I would suggest getting a pricing request completed, should be able to negotiate a good rate with that level of borrowing and LVR. I would suggest circa 1.1x% discount. End of the day rate is far from the most important thing for you. Sounds like you have forged a great relationship with your banker which is great, my only concern is your x-coll of loans... It's not necessary, although your LVR is low and lower valuations might not affect your future borrowing. You don't know what you don't know and problems are only problems when it's a problem... So I would suggest restructure.

As for all the banking with one bank, I don't see this being an issue... Especially at your LVR.

 

[Brady]

Agree with what others say ... Don't be loyal to banks, they certainly are not towards you!

Re insurance...... I get really annoyed every time I speak with a bank they try to offer insurance, usually way more expensive through a bank even though they say you get a 10percent discount. Definetly shop around on the insurance.

Jim

Do you expect them to be cheapest all the time, if they are cheaper 1 out of 10 is that still not a good result and a benefit to you. Agree a lot of banks are now offering insurance, but they have come a fair way and are offering a much better product then previously before, insurance is not about price ever is about the actual cover.

 

[Tonibell]

Are you relationship managed? If so by which area? Premier/private banking?

I would suggest getting a pricing request completed, should be able to negotiate a good rate with that level of borrowing and LVR. I would suggest circa 1.1x% discount. End of the day rate is far from the most important thing for you. Sounds like you have forged a great relationship with your banker which is great, my only concern is your x-coll of loans... It's not necessary, although your LVR is low and lower valuations might not affect your future borrowing. You don't know what you don't know and problems are only problems when it's a problem... So I would suggest restructure.

As for all the banking with one bank, I don't see this being an issue... Especially at your LVR.

We are relationship managed through Premier Banking.

We would have expected that the bank takes better care of its loyal customers but proactively keeping them on their best pricing. That was really the point.

I'm not sure whether we are better off going through the charade of walking - or just spread the business around the banks through a broker.

X-coll is another thing - last purchase we specifically wanted to not x-coll but the relationship manager talked us out of it - effectively blaming the credit area. I understand he takes care of the bank's interest - but I also thought he made sure we got the best out of the bank as well.

We are now thinking you are better off being a "swinging voter" then a loyal customer if you want to get the best from a bank.

That seems to be the view of most respondents as well.

 

[Aaron_C]

We are relationship managed through Premier Banking.

We would have expected that the bank takes better care of its loyal customers but proactively keeping them on their best pricing. That was really the point.

Understandable but misguided - that is part of the selling point of premier/private banking. A good friend of mine has his family affairs managed by a private banker but you should hear his thoughts on how this private banker operates. Doesn't even bother asking him for loans.

Private banking is usually best reserved not for getting you the best deal on your home loans per se, but to give you good advice and access to special deals/investments that other mere mortals couldn't get by virtue of their sheer networth. Most private banking clients aren't paying the best rates on their loans but equally so, they really don't care.

X-coll is another thing - last purchase we specifically wanted to not x-coll but the relationship manager talked us out of it - effectively blaming the credit area. I understand he takes care of the bank's interest - but I also thought he made sure we got the best out of the bank as well.

Credit never insists on x-coll for home loans and it has no impact on rates especially with CBA. The only exception is the commercial/business banking area where x-coll is needed to get the best deals and it may be a condition of credit. I think something is not quite right here but we'd need to see all the facts.

 

[Peter_Tersteeg]

I think you're being relationship managed to the banks advantage.

Nobody is going to pro-actively continue to get you the best rates. You need to periodically check up on this. Lenders only give better pricing to clients who come back to borrow more, or who are about to leave.

X-coll is something that happens at the application, not a condition of credit. If your loans are crossed it's because that's the way the person talking to you submitted it. I've never seen it imposed as a condition of credit or pricing.

Realistically though, from the initial description the x-coll doesn't appear to be a significant problem. X-coll becomes a problem when someone wants to aggressively build a portfolio and maximize their borrow capacity and equity positions. With 3 properties at 65% LVR and other unencumbered properties it doesn't sound like this is likely to become a problem. It's certainly better to avoid it but I don't see that it's about to become a significant problem. Just don't believe that your relationship manager is acting 100% in your favor.

 

[Brady]

I think you're being relationship managed to the banks advantage.

Nobody is going to pro-actively continue to get you the best rates. You need to periodically check up on this. Lenders only give better pricing to clients who come back to borrow more, or who are about to leave.

X-coll is something that happens at the application, not a condition of credit. If your loans are crossed it's because that's the way the person talking to you submitted it. I've never seen it imposed as a condition of credit or pricing.

Realistically though, from the initial description the x-coll doesn't appear to be a significant problem. X-coll becomes a problem when someone wants to aggressively build a portfolio and maximize their borrow capacity and equity positions. With 3 properties at 65% LVR and other unencumbered properties it doesn't sound like this is likely to become a problem. It's certainly better to avoid it but I don't see that it's about to become a significant problem. Just don't believe that your relationship manager is acting 100% in your favor.

If you're to approach your lender for a better rate stating other bank offering x I'm sure they will look at assisting you. Everyone doesn't always know what else is out there, alot of the time people will know but not always til it pops up.

As I mentioned above and Pete has aswell the x-coll hasn't really affected you and likely wont due to your LVR. But still I personally would request the loans to be restructured and in future no x-coll.

I have spoke to my RGM regarding the level on knowledge by the CBA bankers I will be posting a new thread when I have a bit more time on some CBA info...

Understandable but misguided - that is part of the selling point of premier/private banking. A good friend of mine has his family affairs managed by a private banker but you should hear his thoughts on how this private banker operates. Doesn't even bother asking him for loans.

Private banking is usually best reserved not for getting you the best deal on your home loans per se, but to give you good advice and access to special deals/investments that other mere mortals couldn't get by virtue of their sheer networth. Most private banking clients aren't paying the best rates on their loans but equally so, they really don't care.



Credit never insists on x-coll for home loans and it has no impact on rates especially with CBA. The only exception is the commercial/business banking area where x-coll is needed to get the best deals and it may be a condition of credit. I think something is not quite right here but we'd need to see all the facts.

Private banking and premier are different, you have nailed it for private banking though... my understanding is that they aren't looking to win business on price, it's all about service and what they can offer the clients holistically.

Credit doesn't insist on x-coll ever. If valuations don't stack up still can be done without x-coll as figures can't be bodged. Only commerical as Aaron states insist usually on x-coll.

 

[MatC]

Just want to make a point re insurance. The best rate on a loan equals what you pay, however the best rate on insurance does not equal what you can claim. I live in an area flooded in 2011 by the Qld floods, my insurer provided flood cover and luckily my land was 1 meter above the highest flood level and living areas 6 meters higher. However why pay for something if it does not offer you what you thought it said on the packet. Insurance is a very different beast to loan rates, and unfortunately some of the best insurance is from the banks ... Suncorp / Westpac for flood areas it obviously depends on your situation but sometimes the higher price is worth it! Read the fine print not the premium

 

[FinanceStrategy]

A Few Brief Notes

1. If all your loans are with one lender it doesn't really matter if they are crossed or not because of the "all monies" clause in the loan contract. True at this LVR it is unlikely to ever be an issue, unless the strategy all of a sudden becomes to aggressively build an investment portfolio
2. Half the loans are fixed so you are not in much of a position to bargain with the bank now as there will be a significant financial penalty for leaving - they will likely bet you won't walk
3. Aggregate borrowings with a lender will get you better rates (if you ask). And a broker will get you a better rate than you will get through Private Banking and give better service
4. For insurance go to a broker who is "provider agnostic" as they will get you the best terms and price
5. Back to lending for a minute, if you are continuing to grow your portfolio and run out of serviceability you will need to go to a lender who assesses your current loans at what you are actually paying rather than at a sensitized rate

 

[Rolf Latham]

1. If all your loans are with one lender it doesn't really matter if they are crossed or not because of the "all monies" clause in the loan contract.

My experience of this.............

All monies clause only becomes an issue if you are in default of your contract.

Xcoll can stop you in your tracks even though you are the perfect credit score" poster person."

BIG difference.

ta
rolf

 

[see_change]

In response to the original question ...

No . We have dealt with all four majors . Current don't have anything with ANZ .

We have found that we get better responses from the banks if we go through a mortgage broker . Last two times we went DIY with a bank we had slow drawn out process , and we won't go that way again .

Cliff

 

[Terry_w]

1. If all your loans are with one lender it doesn't really matter if they are crossed or not because of the "all monies" clause in the loan contract. True at this LVR it is unlikely to ever be an issue, unless the strategy all of a sudden becomes to aggressively build an investment portfolio

This I must disagree with.

Imagine the owner wanted to sell one property? The bank will have to allow the sale to proceed as they have a mortgage. If the circumstances have changed they may not readily give consent.

If the securities are not crossed then the process is much easier. No reassessment or valuations of remaining security are needed.