Loan from MECU for IP - is this good?

[GlennG]

I've been with my Credit Union for 20 years so I've just sort of assumed I would stick with them. They wouldn't offer me any special deal despite us having money with them for so long, and having introduced kids etc to them. And they don't have IO loans (I wonder why not?)
Another factor is maybe that in a year or two I'll retire and then have an allocated pension and won't be paying much tax.

So - 390K loan
MECU Premium 250+ loan

$600 or so fee to establish
5.34% variable rate as of 18 Oct 2009
30 years Principle and interest repayments
Offset Account, $8 per month

Too much stress for me buying IP, I think i'm sticking to one - please don't throw me out!
So am I doing ok with that do you think, or should I be looking around at other lenders?

Many thanks

 

[Rolf Latham]

Hiya Glen

The loan product looks ok.

With an investment horizon of 2 years , is it the right time to buy an investment property ?

Im assuming you will be borrowing a decent loan to value ratio rather than just say 30 ot 40 % ?

ta
rolf

 

[GlennG]

It's probably going to be a CS (Cash Sink) rather than IP
We wanted to buy in a very good location, one where me might retire to. We would plan to rebuild once in a position to.
Mixing IP with holiday home/retirement place, I'm sure that's a bad idea. But it's what were doing anyway

I'm pleased that you think that the finance sounds ok. Unless others claim that we could do a lot better then I won't look at changing it.

I've saved very hard in terms of super, and have been salary sacrificing as much as possible, so things look ok for years down the track so I wasn't too concerned about the 1-2 years to retirement

thanks

 

[Bradsdad]

Decent enough product. There are others priced favourably that do are the IO facility available.

What is the LVR?


Regards
Steve

 

[josko]

Hi Glenn,

Looks good to me too, as long as you are happy with P&I.

Don't be suprised about the lack of customer loyalty. It is a common subject with most long term clients of banks.

Good luck with your loan and your retirement.

Regards JO

 

[GlennG]

Decent enough product. There are others priced favourably that do are the IO facility available.

What is the LVR?


Regards
Steve

We are borrowing 80% of the negotiated price.
Is the LVR then 80%? The house hasn't had an independent valuation done on it.
In other words, is the 'V' in the LVR referring to just whatever you were prepared to pay for the house?

 

[Propagate]

We are borrowing 80% of the negotiated price.
Is the LVR then 80%? The house hasn't had an independent valuation done on it.
In other words, is the 'V' in the LVR referring to just whatever you were prepared to pay for the house?

The 'V' is whatever the banks valuers deem it to be. If the valuers value it less than the negotiated price, the bank will lend you 80% of that value. So, if you then need more money you'll either have to pay mortgage insurance to the bank or put more deposit down.

Eg. If the negotiated price is $500k and you want 80% from the bank (400k) but the bank value the place at $450k, they will want to give you $360k as an 80% loan - but you may still want $400k to be 80% of the negotiated price. So, you'll need to put in another $40k or borrow 89% of the banks valuation but pay them LMI for borrowing over 80%.

 

[GlennG]

The 'V' is whatever the banks valuers deem it to be. If the valuers value it less than the negotiated price, the bank will lend you 80% of that value. So, if you then need more money you'll either have to pay mortgage insurance to the bank or put more deposit down.

Eg. If the negotiated price is $500k and you want 80% from the bank (400k) but the bank value the place at $450k, they will want to give you $360k as an 80% loan - but you may still want $400k to be 80% of the negotiated price. So, you'll need to put in another $40k or borrow 89% of the banks valuation but pay them LMI for borrowing over 80%.

Thanks for that.
MECU told me that they wouldn't do a valuation themselves provided I only borrowed the 80%
Is that a common thing?

I was pleased to hear that because the house and land might sell for very much less in most other locations. Maybe 250K instead of something like 500K. We're paying an enormous amount for the particular location, and for the view.
I've no idea how valuers take into account the view. We all might have different opinions on how good the view is.

When it comes to actually getting the loan and they say that they need a valuation done I would be a bit put out!
I had it in writing that the loan was approved, and there was nothing about needing a valuation.
Cheers

 

[Propagate]

Don't know about the valuation thing. We are also with MECU for our PPOR and today got conditional approval on a loan for an IP. Partly funded as a split loan from the PPOR. They said that I should send them in my latest council rates notification a they will just use that as a valuation, providing it gives enough equity - if not, they said they will have one of their valuers inspect.

We had a problem with their valuers when we took the PPOR out to start with. It was a build. The land and build came to $540 but their valuers valued at $475k! You can't buy the cheapest house for sale on the estate at the time for that sort of money. That valuation was 18 months ago. A house the same as ours, from the same builder but on a smaller block and not as well specked is currently for sale for $624k so we are hoping for a favorable valuation.

Good luck with yours.

 

[GlennG]

Hi Glenn,

Looks good to me too, as long as you are happy with P&I.

Don't be suprised about the lack of customer loyalty. It is a common subject with most long term clients of banks.

Good luck with your loan and your retirement.

Regards JO

I guess P&I is ok in that it will be mostly interest anyway for a number of years. And I probably like to see that the amount owing is actually going down.
Thanks for the insight about customer loyalty and your best wishes

 

[GlennG]

Don't know about the valuation thing. We are also with MECU for our PPOR and today got conditional approval on a loan for an IP. Partly funded as a split loan from the PPOR. They said that I should send them in my latest council rates notification a they will just use that as a valuation, providing it gives enough equity - if not, they said they will have one of their valuers inspect.

We had a problem with their valuers when we took the PPOR out to start with. It was a build. The land and build came to $540 but their valuers valued at $475k! You can't buy the cheapest house for sale on the estate at the time for that sort of money. That valuation was 18 months ago. A house the same as ours, from the same builder but on a smaller block and not as well specked is currently for sale for $624k so we are hoping for a favorable valuation.

Good luck with yours.

That's interesting and something for everyone to watch out for. Hope it's going ok for you
Thanks for the best wishes