Need advice on 95% LVR loan

[write2abdul]

Hi there!

I'm looking to buy my first home to live in. Few details about me

• 
  Living in Sydney and looking at buying around 650K
  Married and 1 kid
  Currently renting
  Paying 2200 rent per month(Happy owner). Have been paying for 2 years now
  Stable income around 130K
  Wife Not working
  Have deposit of 65K

A broker has been helping me to get a loan with the following details

• 
  95% LVR loan
  4.69 fixed for 3 years
  Have some portion as variable in that Loan
  Interest only payment
  Me bank

The product offered doesn't have 100% offset account. I wanted to build equity by having the offset account but all I get with my current situation is having about 40K portion as variable.

The agent has also given another product with liitle higher interest rate around 5.05 variable interest with 100% offset account and the bank is bankwest with 100% topup of LMI on the loan.

Which product do you guys suggest that would be beneficial to me in the long term

 

[Rolf Latham]

Im pretty sure you can combo the ME 3 year rate with a variable offset split

ta
rolf

 

[Mick C]

Won't comment on which is better as it depends on your goal and what you want to achieve etc ...BUT as rolf mentioned you can get a 100% off set on the variable split but it will be P/I ( won't be I/O) + the rate is 5.18% on that variable portion.

For your 1st purchase - 98/100 of the time i would recommend some sort of offset account as it allows you to pay down the loan + save on interest in a tax efficient manner as well.

 

[write2abdul]

Thanks Rolf.

Sorry if it already been answered in the forum but want to understand how does a variable offset split work. Would you be able to give me an example?

As suggested in this forum, I like the idea of avoiding principal payments and build equity. Is that possible with a variable offset split? Would I be able to withdraw the money any time?

Im pretty sure you can combo the ME 3 year rate with a variable offset split

ta
rolf

 

[Jamie M]

Thanks Rolf.

Sorry if it already been answered in the forum but want to understand how does a variable offset split work. Would you be able to give me an example?

Hiya

It means you'll have two loans set up - one fixed and one variable.

The variable loan will have an offset account linked to it (a bank account that you can add money to and withdraw money from which saves you interest on your home loan).

Cheers

Jamie

 

[write2abdul]

Thanks for your super quick response guys. Really appreciate your help and guidance.

Thanks Jamie for the explanation.

As Mick said the variable account would be P&I only, do I understand this right

1) Fixed account - Interest only payments
2) Variable account - Principal and interest payments

If yes, then the next advise I need from you guys is how much should I have in the Variable portion if my loan is 600K

Hiya

It means you'll have two loans set up - one fixed and one variable.

The variable loan will have an offset account linked to it (a bank account that you can add money to and withdraw money from which saves you interest on your home loan).

Cheers

Jamie

 

[Jamie M]

If yes, then the next advise I need from you guys is how much should I have in the Variable portion if my loan is 600K

Leave it large enough that you don't risk having a higher amount in savings than the loan balance (because you will have surplus funds not offsetting anything).

Cheers

Jamie

 

[write2abdul]

Thanks Jamie!

Leave it large enough that you don't risk having a higher amount in savings than the loan balance (because you will have surplus funds not offsetting anything).

Cheers

Jamie