Opinions on Heritage Building Society pro pack

[quintets]

Hi,

Has anyone used the HBS pro pack?

I've just asked my current mortgage broker to hunt around for a PPOR loan. I've used this guy several times for IPs over the past 5 years and his considered opinion was the pro pack from HBS. His summary was like this.

6.82% 1 year intro with offset account, $5/mo acct fee, no application fee, valuations included. After 1 year at a cost of $450, will revert to pro pack, current rate is 7.35% will have annual pro pack fee of $250/annum to cover all pro packs that we may have in the future.

Is this a good deal? It doesn't sound too bad, but I just don't know. Is there a good chance of finding something better?

The reason I use a mortgage broker is because I'm to busy to hunt around, but I'm starting to wonder if there's anything better. We've already got two other IP loans and I'm wondering if he's picked HBS from his short list of ING and ANZ because we're existing customers.

Any opinions would be appreciated.

Jireh

 

[Spectre]

Hi Jireh
pros and cons with the heritage - if its an IP then I dont think you can go I/O on the loan (if that matters)
Besides that when you hear the pros and cons about banks, I get a lot of positive feedback about heritage and their customer relationships.

 

[Rolf Latham]

Hiya

HSB pro pack is ok, case by case

IO is ok too, but dont expect that with proper offset.

Also, max refinance LVR is 90 %, being PMI insured.



ta
rolf

 

[Kristine..]

6.82% 1 year intro with offset account, $5/mo acct fee, no application fee, valuations included. After 1 year at a cost of $450, will revert to pro pack, current rate is 7.35% will have annual pro pack fee of $250/annum to cover all pro packs that we may have in the future.

Hi Jireh

Have you done the sums on this? $450 cost to 'save' 0.52% (of what?) for twelve months plus all the messing around doing the conversion - does this represent a true saving to you or is it just a way in to the deal?

Heritage do a decent pro pack. I have investors with Heritage with Interest Only and the full offset, however having said that all deals must be evaluated in context. As this purchase is for your PPOR are there any other mitigating factors which may have influenced the choice of lender or of loan product?

Only you know the full picture and how your properties and loans are structured. There is much more to successful structuring than the loan product. Honeymoon rates always sound attractive but come at the cost of restructuring which may negate any short term benefit or perception of benefit.

There is no such thing as a free lunch. Do the sums yourself and be realistic.

Cheers

Kristine

 

[Rolf Latham]

Hiya

The HBS offset isnt what Id call 100 % proper offset.

Its a throwback to last century .

This is my experience, and things might be different in Victoria


Its an interest based product, rather than an interest only product.

Say you have a 100 k loan with 100 k in the offset.

100 - 100 = zero differential so my interest due each month is zero.

True

But the HBS product demands you still make a repayment as per your contract each month, thence your principal reduces.

No big deal you think, I can redraw that. Nah, you can only redraw advance repayments...........so now you are stuck with a dog, and you have to move lenders

So, for a Ma an Pa Home loan its an ok product , for an investor its a BIG no no.

The same theory applies to HBS fixed rate product as well, while u can pay off as much as you want, you cant redraw interest savings only

Give me something Adelaide Bank Product any day, with fixed or variable 100 % offset, oR many of the others with proper 100 % offset, like almost all other banks (xcept STG on PPOR loans, similar to HBS product)

We do a fair bit of HBS, but mainly owner occ or fixed rate IP loans

ta
rolf

 

[Peter_Tersteeg]

The Heritage pro pack required (last time I checked) that your income is deposited into one of their accounts. This may or may not be an issue.

 

[quintets]

Hiya

The HBS offset isnt what Id call 100 % proper offset.

Rolf, what would you call a proper offset on an IO loan? Is it the interest payable per month is based solely on principal-offset balance? ie. A loan balance of $100K @ 7% would pay $7K interest. But add a $40000 offset balance would reduce the effective loan balance to $60K and then $4200 interest, right? And most Aussie banks provide this then?

I suppose HBS still asks for the full payment because building societies tend to more conservative in terms of balances ? Maybe they just want to constantly reduce balances? Well...that's my gut feeling.

Hmmm...I can't say I've ever had a hassle with HBS, but I'm beginning to wonder if it's because I'm not demanding very much. Overall, they're been not too bad.

Well, right now we've got 2 IP loans with HBS and our soon-to-be-settled sale of our PPOR is with Homeside. The IPs were fixed rate until just recently. I think it's hard to beat HBS on fixed rate stuff. But hearing how Adelaide allows offsets on their fixed rates has made me wonder there may be more flexible products out there. We wanted to get access to equity on our IPs loans and had to get a special interest-only loan as a second account. There was no "easy" way to get a LOC or anything to pay for renovations and other investments. Isn't that the main criteria for a good IP loan...ease of accessing equity as the value of the property grows? Or is this a pipe dream?

I'm still waiting to talk to my broker on Tuesday after Easter, but I'm going to have a lot more questions for him. Thanks everyone for all the replies.

Jireh

 

[Rolf Latham]

Hiya Jireh

Im not saying there is anything worng with the HBS product mix per se.

We have put a lot of clients into HBS

The main drawbacks are that dog offset, AND this is one that might not affect you, the max refinance is 90 % lvr...............vs a few other lenders that will allow equity pull to 95 % for the next IP.

In some cases one has no choice but to place with HBS, even with those issues.

On the upside they are good with all sorts of trust structures, and the serviceability is ok if all new loans are > than 12 mths old

Ta
rolf