NEW MORTGAGE RATES (need broker!)

R

ritchie77

:)Hi guys

I am looking into getting my 2nd IP in the near future.......
The mortgage rates going up are a bit worrying and my mortgage broker I was hoping to use seems to have disappeared?? (or maybe on hols but he not got back to me).... For my last property I got the 6.95% fixed SGB were offering but I dont like my chances of getting anywhere near that now!

I would like to put it to other forumites....

A) If you are getting or recently got a mortgage what rate are you looking at? (Fixed or Variable because I am not sure which to go with in the current market?) and when/where did you get this? (ie SGB 6.95% fixed 3 yrs in July last year)

B) Does anybody have a good mortgage broker they can recommend in Sydney? As I said I am looking into buying in the next couple of months - just not sure which state!! (NSW OR QLD - but thats another post altogether!!)

Thanks guys,
Ritchie
 
by the time you move id bank for 9%fixed. i think anz has popped up their variable to 8.77.

I can give you my brokers details if you need one
 
stumunro said:
by the time you move id bank for 9%fixed. i think anz has popped up their variable to 8.77.

I can give you my brokers details if you need one
Click to expand...

I was kinda thinking going variable??? I know there may be another rate rise or 2 this year but then think potentially will go down.... but who knows?

I think I can handle a coupl of rises and really think fixing at 9% is not good enough (although it could be if they keep rising?)

Yes please, if you believe they are good could you please advise? Thank you in advance!
 
I have been advised by my broker that St George are putting their interest rates up tomorrow. You can lock in at 8.29% fixed with a potential 0.14% reduction for fives years today. I'd rather have a consistent debt rather than a fluctuating one but thats just my opinion.
 
I'm settling on a place on 30 January - I'm locking in rates with Homepath for 5 years at a rate of 8.09% (unless they raise rates again before settlement).

A word of warning: Homepath are fairly cheap - BUT they are absolutely shocking to deal with, and I don't think they lend to companies or trusts.
 
Hi Ritchie, I agree with Mick - best to lock into fixed so you know what you're up for. Besides, you can vary the term and re-assess at the terms conclusion.
 
And if the rates turn around to a great extent you can always pay the break fee which appears to be a maximum of $1000 (reducing over the term of the fixed period i.e. $500 after 21/2 years) - I can't see the down side to fixing myself, particularly in the current climate
 
Hiya Mick

Warning !

On the fixed rate front, there are 2 costs

One is a cost you will know pretty much for sure, thats the deferred estbalishment fee........usually a few hundred, sometimes as high as 2 % of the loan amount.

THEN comes the one you cant work out :)...........the economic break cost.

If you have a fixed mortgage with a securitised lender OR cost of funds have dropped a bit since you took out the fixed mortgage, there could be a substantial payout needed to move to a variable rate or to move to another lender.

Lets assume you have locked at 8.4 fixed for 5 years, and you want to exit in 2 years.

If in 2 years the standard variable is at 7.5 and the fixed rates are around that or a bit higher, you will be asked to pre pay the economic loss to the lender for the remaining 3 years ..................just waht that might be varies hugely from funder to funder

ta
rolf
 
Rolf Latham said:
Hiya Mick

Warning !

On the fixed rate front, there are 2 costs

One is a cost you will know pretty much for sure, thats the deferred estbalishment fee........usually a few hundred, sometimes as high as 2 % of the loan amount.

THEN comes the one you cant work out :)...........the economic break cost.

If you have a fixed mortgage with a securitised lender OR cost of funds have dropped a bit since you took out the fixed mortgage, there could be a substantial payout needed to move to a variable rate or to move to another lender.

Lets assume you have locked at 8.4 fixed for 5 years, and you want to exit in 2 years.

If in 2 years the standard variable is at 7.5 and the fixed rates are around that or a bit higher, you will be asked to pre pay the economic loss to the lender for the remaining 3 years ..................just waht that might be varies hugely from funder to funder

ta
rolf
Click to expand...

Thanks Rolf - I will be having a very interesting conversation with my mortgage broker if I ever do need to break - the advice I received was that the "only" break cost was a maximum of $1000 which became proportionally less over the life of the fixed period. I will go back and check this advice with him.

I fixed my first property for 5 years at 6.8% though and I am pretty comfortable with that rate

Cheers

Mick
 
The information Rolf's mentioned is relevent for almost every fixed loan. This also means that in theory, if you're fixed at 8% and variable rates are coming down, but currently still higher than 8%, you should be able to exit and the bank will owe you money.

Naturaly it doesn't work that way, but banks don't owe you anything. In many cases, you'll be charge an administration fee of a few hundred as a minimum.
 
I am happy with the 6.95% MENTIONED EARLIER IN THE POST!

However, with the current situation I would look at fixing - but variable is also worth looking at in the current situation..... The views I have seen so far for fixed we are looking at over 8%....

Does anyone have any ideas what the 2nd tier banks are currently offering (ieColonial, BankWest, etc)

I am also looking for any suggestions of a good mortgage broker?

Cheers:D
 
Hey Ritchie,

Yes fixed rates are all mostly over 8% now unfortunately..
I'd be looking at those such as NAB, St George or Bankwest since they haven't gone as overboard in raising their fixed rates as some of the others have. Even so, they are still around the 8.3% mark.
Colonial is actually really the Commonwealth Bank now, it's their broker channel.

Variable should be considered seriously, or a split loan. With variable you don't usually pay the "Standard Variable", because you have options such as pro packs or the cheap basic variable loans. So you would get a better rate with variable at the moment (about .50%), but you've got to decide if you can handle more rate rises. There's another recent thread on this here: http://www.somersoft.com/forums/showthread.php?t=38440

Regarding a good mortgage broker, there's plenty of us on the forum, 3 of us have replied to your thread and there are more of us lurking about.
Where abouts in Sydney are you? I do alot of work in Sydney and I'd love to come and seeyou.

Cheers

Dan
 
Another consideration before fixing is that some lenders have limits on how much you can reduce the loan account balance via a redraw facility.....which limits how much you could reduce interest pmts.

though not an issue if you haven't got lots of spare $ available to sit lazily in a loan account.
 
Thanks for the input guys....

Thats interesting that the fixed rates have gone up so much, but I guess the Variable rates will have also gone up eh? Its a no-win situation!

I am in the Inner West of Sydney if thats convenient??
 
Variable rates have gone up, but not as much as fixed.
For example you can get a 7.85% basic variable now, or fix the rate at over 8.3%.
The issue to consider is the risk of variable rates going up more once you get your loan, you need to decide if you can handle the potential increases.

Inner west is great, I'll forward you my contact details.

Cheers

Dan
 
you could also look at splitting the loan
with a few clients we're also using adelaide bank w/the 100% offset on the fixed which allows a bit of flex. Also there isnt the rate lock fees

Bearing in mind they wont I/O over 90%.

Noting the exit costs but their strategy is long term hold and they figure variables will be outpricing fixed for a while so for them its a comfort/cashflow thing.
 
Splitting is a good option if you want an offset, then you can choose pretty much any lender that has offset accounts.

Another option with fixed rates is Heritage Building Society, they allow unlimited extra repayments and redraws on their fixed rate loans which is a pretty awesome feature, and with free rate lock. This even applies to interest only investor loans.

One must be careful using redraw though because if you don't use it for income-generating purposes you can affect the tax deductability of that portion of the loan!

Dan
 
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