Professional packages offered by major banks

N

Nth Brisbanite

What do forumites think of the professional packages offered by all the major banks (ie Westpac, ANZ, CBA and NAB)? I notice that Macquarie, Adelaide and Bank of Qld don't offer these packages. Some of the benefits offered are:
  • reduced interest rates
  • reduced or no application fees
  • reduction in margin loan rates
  • increased term deposit rates
  • fee free gold cards (compulsory for some banks)
  • free or reduced valuation fees
  • no loan approval fees for personal loans

For about $350 per year these packages appear to be a bargain, but are they?. One disadvantage is that investors end up borrowing all or most of their money from one bank.

What is your experience with these professional packages? Have you experienced any disadvantages?
 
Hi Brisbananite,

I had enquired into this with my broker about a year ago who has advised me not to put all my eggs into one basket. I've just received a 0.8 increase from Macquarie so I'm certainly glad I didn't put all my loans with them, and as far as I can see Commonwealth and St George are having a field day with their rising rates.

I also just attended a seminar whre Bill Zheng from Investors Direct highly advised diversifying your loans. Don't forget Margin Loans can be called back.

It's your call, but just like property I stick to diversifying.:)
 
I've been using one for years.

I think they are good. They enable me higher interest rate discounts. I'm getting 0.9% off now.

No reason why you can't have two professional packages at two banks if you wanted to spread the risk.
 
Pros and Cons

Tee hee,I bet no one thinks thats funny

The core reason behind pro packs is to get a more sticky bank client.

Stats clearly show that if you have 3 or more products with a lender, the chances of you moving on is about 30 % of a single mortgage loan holder.

Pro packs can be used to a clients advantage, but u can also get 'sucked" in...... diversification has never been more important now than ever.........and sometimes the . x off over a million comes with another price.........

We do a lot of WBC, ANZ and CBA, but also do lots of ABL, used to do a fair bit of Mac, and other lenders that dont do pro packs

Comes down to what works for the client on the day, i dont think there is a fix all solution here .

ta
rolf
 
We've also been using one for years.

We have most of our business with them, but also use other lenders (and absolutely no x-coll, thank you very much!). With an additional discount, it saves us way, way more that the $395 pa ProPack fee, and we have had very few problems (all of which have been resolved satisfactorily and quickly).

Cheers
LynnH
 
Rolf Latham said:
The core reason behind pro packs is to get a more sticky bank client.

Stats clearly show that if you have 3 or more products with a lender, the chances of you moving on is about 30 % of a single mortgage loan holder.

Pro packs can be used to a clients advantage, but u can also get 'sucked" in...... diversification has never been more important now than ever.........and sometimes the . x off over a million comes with another price.........
Click to expand...

It's good that you have highlighted the biggest danger of pro packs - clients do get "sucked in" as you say and don't look at the bigger picture.

Can you explain why diversification is more important than ever? Also what do you mean by "another price".
 
Hiya

The biggest price you will pay as an active investor with too much in one place of lending is the price of ............inertia. There are 3 sorts

The one you impose on yourself for whatever reasons ( valid usually at least in our own circumstances, and emotional comforts ).

And the one that is imposed upon you................every third fresh enquiry we get these days is from NON clients looking for advice on how to get around current cashflow and/or equity access issues ...........not surprising really.

Ed Chan says it very well when he says its not about money or property..........its about time.

If you can buy enough time u will usually be ok. If time runs out ( you run out of accessible equity and or cashflow to hold) u can get into trouble.

At a time where there is some contraction in the previous ready availability of funds, and more contraction on the horizon, one really needs to think middle term................fees and rates are one thing, but are micro management action items for many ( note NOT ALL investors) .


Some things to ponder

1. If I cant get at more of my equity at 80 or 90 % LVR, am I stuck ?
2. If I am stuck and I have to sell down, in a flat or slippery market, what does it mean to my bottom line and plans
3. Can i execute my long term plan with my current resources or do I have to give MY plan a serious haircut.


I could go on and on, but there is a risk of analysis paralysis here ............a third form of inertia.

ta
rolf
 
keep in mind everything's negotiable. i got a major bank's professional package at zero cost by asking for everything in the package except the bundled gold credit card which i didn't want.
 
softmonkey said:
keep in mind everything's negotiable. i got a major bank's professional package at zero cost by asking for everything in the package except the bundled gold credit card which i didn't want.
Click to expand...

That's interesting. I'm currently refinancing some of my loans to one of the majors so will try it out.
 
Hi softmonkey,

I got that deal as well last year in Sep/oct o7 i.e got the package but no annual fee. May I ask when and which lender you got that deal from. I find that now the banks are less generous with waiving the package fee - maybe only waive for the first year.

TAG
 
softmonkey said:
keep in mind everything's negotiable. i got a major bank's professional package at zero cost by asking for everything in the package except the bundled gold credit card which i didn't want.
Click to expand...

As far as I am concerned as long as the gold credit card is offered for free I don't care even if it is compulsory. If I don't need it I just cut it into two pieces the day I receive it.

Come to think of it the only drawback I see is that it may reduce my borrowing capacity :confused:

Cheers,
Oracle.
 
For the three loans which I have under one of these "professional packages" I've found:

1) The $25/month fee is cheaper than three separate loan account keeping fees and a separate monthly banking fee on my accounts.
2) The waived loan application fees also make up for the $25/month fee.

This is before I even access variable rate discounts and waived annual credit card fees.

BUT, for my next loans I'll probably end up going with another lender, so for me it will not influence me to continue borrowing from the same lender any more than any other pure monetary consideration.
 
Hi Rolf,

Could you give some sort of idea as to what is sort of magnitude of further contraction of funds you are expecting please?

Cheers

Tulip
 
Hiya

Cant produce numbers , but a guess would be with the securitised lenders like Macq etc either gone ( for the moment) or very hobbled, the fringe stuff has taken the biggest contraction.

High lend lo and no docs at reasonable rates are history ( for the moment).

Also mainstream lenders and mortgage insurers have become tougher on things like cash out restrictions, IO periods and the like.

There are still full doc deals to be had at 95 % with cash out..................

At 80 % lvr full doc there seems to still be plenty of money at the moment, largely I believe because the demand seems to have dropped.

There are some new entrants into the no doc and lo doc area which look really promising ( for the moment)

ta
rolf
 
Thanks for that update Rolf.

Interesting about the new entrants into the no doc and lo doc area coming through.

Cheers

Tulip
 
The pro packs at the banks can be useful for customers who want the fee free transaction account, and credit card and discounts on insurance and financial planning, and whatever else your package may include. You can certainly save a considerable amount on bank fees this way.

But what if you just want a no frills loan without all the extra bits?

When this is the case, the pro packs are often more expensive than some of the other lenders.

I'll give you an example.
Let's compare one of the Big 4 Banks standard loan, and not to have a go at them or anything, in this case I'll pick St George, and we'll compare it with one of the no frills standard loans at a bank that doesn't have the propack. For the purpose of this example, let's say ING (again nothing for ING, just as an example).

We'll do this example on a nice round loan amount of $500K, Interest only over 30 years. We'll compare the actual monthly payment for each.

The St G Standard variable loan with pro pack interest discount, and fee waivers. The rate (today anyway) is 9.47%. After you take the 0.7% pro pack discount the rate becomes 8.77%. The annual package fee is $375pa.

So your monthly interest only loan payment is $3,654. If we add to that the annual fee as a monthly payment ($31.25pm), your monthly payment becomes $3,685.25

At ING, the mortgage simplifier loan (their standard variable loan) has no pro pack, no monthly fees and no annual fees. Their interest rate (today) is 8.84%.

This would give you a monthly loan payment of $3,683pm. And there is nothing extra to add on.

So in this case the ING loan is a shade cheaper than the St G loan with the pro pack.

With loans less than $500K, the saving is more significant. As your loan amount increases, the interest rate saving on the pro pack outweighs the cost of the annual fee.

But, something for you to consider
 
Further to Jenelle's post...

You also have consider issues like

- Mortgage insurance premiums & if they are capitalised or not (and if not if it still leaves you funds to complete whatever you're doing)
- Rate Lock fees - if they are applicable/upfront/taken out of loans
- Future application fees
- Where the money's coming from
- IF the lender will approve it or not & their timeframe/decision making process (or lack of the lenders decision making processes in some cases)
- The type of loan - i.e. construction, full doc, low doc, no doc (or a mix of)
- Security being offered
- ABN issues (if needbe)
- Mortgage insurer exposure
- etc.

Point being there can be more to life than a pro-pack fee in many cases. People sometimes whinge over $400 a year (or less) package fee or an estab fee but to get to rent the banks money off of them to make a better place for yourself down the line (hopefully) while you're still claiming the fees on tax....
 
Last edited:
You must log in or register to reply here.

Similar threads

L
Is this a good deal ?
Replies
11
Views
2K
Rolf Latham
R
C
Thoughts on Bendigo Bank rates & Adelaide Bank
Replies
13
Views
3K
Jamie M
Jamie M
Bandita
Business Loan for Personal Investment Queries
Replies
19
Views
2K
Bandita
Bandita
M
Haggling with the big banks
Replies
19
Views
3K
Brady
Brady
Redom
How to grow a multi-million dollar portfolio on an average income
2 3 4
Replies
77
Views
31K
C Stewart
C
Back
Top