loans.com.au - 4.75%

Discussion in 'Property Investment - Other' started by jackbak, 12th Jun, 2013.

  1. jackbak

    jackbak Member

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    Anyone used loans.com.au before? They are now offering 4.75% variable which is the cheapest I can find at the moment and just wondering if they have a history of offering low rates and then hiking up the rate after a couple of months?

    Cheers
    jackbak
     
  2. tobe

    tobe Mortgage Broker

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    no, but if they do have such a history, so what? A rate focussed customer will simply find the most cheapest rate every six months or so and move lenders.
     
    Jamie M likes this.
  3. jackbak

    jackbak Member

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    Thanks tobe, it's important to me because my wife will be off work within the next 12 months and we rely on her income to get finance, so once she stops working we will be unable to meet the servicing requirements of banks and wont be able to just move lenders at will.
     
  4. Shaneelastic

    Shaneelastic Member

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    So you can't meet servicing requirement and still going to buy
     
  5. jackbak

    jackbak Member

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    We'll be able to meet the repayments, just not all the banks requirements for obtaining a new loan. Being self-employed my situation sometimes gets complicated.
     
  6. Shaneelastic

    Shaneelastic Member

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    Ahhhh.cashies wink wink
     
  7. tobe

    tobe Mortgage Broker

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    Then choose a lender whose variation policy is simple, and not 'credit critical'. ie one that doesnt ask for a new application when you want to make changes to the loan.

    And no, Im not sure what Loans.com process is for variations.
     
  8. jackbak

    jackbak Member

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    Haha I wish!! Just that my work is seasonal.
     
  9. jackbak

    jackbak Member

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    Thanks for you feedback but I think you're over complicating my post tobe. Just want to know what others experiences are with loans.com.au
     
  10. esh

    esh Member

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    Is it purely online based? Could be hard sometimes if you need assistance. I sued to work for Cba before and I remember the loan specialist saying her new clients were fidningt hard egtting statements from an online loan provider they were using- charging them high fees to even send it out. Not sure, just putting that out there that they may not be as flexbile (if it is purely online)
     
  11. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    There's a modest amount of consumer feedback on the whirpool forums. Use Google and search the following: site:whirlpool.net.au "loans.com.au"

    My observation is the feedback is generally better than some of the other operators in this space.

    My own thoughts are that if you're after a simple, cheap loan for your own home and have little to no investment asperations, they're probably going to be fine. If you're going to build a serious investment portfolio and access equity in this property, alongside various serivicing and tax related implications, there might be a more appropirate finance strategy.

    As a broker one of the important things I'm often asked is to provide compeditive rates. Obviously this is very important. It's also interesting that after 3-4 properties, most investors still want competitive rates, but their priority changes to the lender that can provide the money on reasonable terms, rather than simply the cheapest rate.

    I'd also be a little nervous about using seasonal income to get a loan with an online lender.
     
  12. Aaron_C

    Aaron_C Finance Broker

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    Self interest dictates that we brokers don't usually recommend online lenders like loans.com.au or ubank. However, if absolute rock bottom rates are your main priority, then by all means go for it.
     
  13. jackbak

    jackbak Member

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    Thanks esh, good point. Will find out about these charges beforehand.
     
  14. jackbak

    jackbak Member

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    Rates are definitely my number one priority at the moment, the best my broker has recommended is 5.13% and the loan is $1.35m so even though the difference is only .38% it will save me thousands every year.
     
  15. jackbak

    jackbak Member

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    Thanks PT_Bear, when I say seasonal it's because I pay myself an average wage over the year, enough to get by, and then distribute the profits with the other director at the EOFY. If I had to I could average it out over the year but we just find this way easier but banks aren't terribly fond of it.
     
  16. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    the simple fact that loans.com.au is funded by FirstMac who use mortgage backed securities as their funding, makes me shudder.

    are they collaterising your debt to onsell as funding elsewhere? if so, who holds the title to your land?

    after seeing the robosigning mess in the US, i don't think i would entertain using any loans.com.au product regardless of interest rate.

    next thing you know a creditor wants your house even though you haven't defaulted on your obligations.
     
  17. jackbak

    jackbak Member

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    If they get bought out by another financier then you simply owe the money to someone else, under the same contract conditions. No one will come looking for your house if your making payments, if they do you get finance from someone else.
     
  18. tobe

    tobe Mortgage Broker

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    um, yes, thats what happened to quite a few lenders during the financial crisis, and those lenders that bought the mortgages decided to have their book 'run off'. In effect this meant no new loans or variations, higher interest rates. most of the clients refinances, the unlucky ones got stuck.

    With your seasonal income, Id say you might be a candidate for being stuck if anything like that happens again.

    Id suggest either one of the big four, or one of their subsidaries. if your really rate focussed, perhaps Ubank might be a lesser risk?
     
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Try telling that to anyone who had a loan with Macquarie bank during the GFC, or FirstMac, or RAMS, or GE Money, or any one of a dozen other securetised lenders.

    True that very few people were asked to pay down debt quickly, but their cheap rates quickly became expensive. Refinancing isn't as simple as many would have you believe, especially when times do get tough. Your own admission is that your income is tricky to deal with, what happens if banks decide they only want to deal with AAA customers? This happened a lot in 2008-2010 (rates went up faster than the RBA and did not come down). I'm not convinced that we're headed for happy economic times (if we were, rates wouldn't be at a historic low).

    As for the contract conditions, read the fine print. They can change the terms and conditions at will. Dispite the marketing saying their rates are locked to the RBA, they can change this as well. When a lender goes into receivership, the funder tries to recover their money, not keep borrowers happy with low rates.

    Like I said, they're probably fine for a run of the mill home loan, but for the trickier deals, there is a lot of risk in dealing with certain lenders.
     
  20. Rolf Latham

    Rolf Latham Member

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    youd better get a new broker then:) someone like John Mardell who is on this forum will be able to get you a 4.8% effective rate with a mainstream lender.

    Also be mindful if the loan will have a fairly substantial amount in redraw in it ie, your money.................. take a careful look at the redraw conditions - often this is what sways people to look at a lender with a banking licence in a separate and discrete offset account

    another small challenge will be that many of the smaller RMBS sourced lenders had issues with larger loans since they need to get mortgage insurance cover.

    Another thing these bearing in mind is the valuation - most of these lenders will not lay to do upfront valuation. So you go through the entire process and find that they don't share your opinion


    ta
    rolf