ah someone elese that took up FirstMac's deal.
it was incredible - i think it was funded with a hedged loan from Japan.
Rate Busters? Looks like the cheapest?
- Thread starter s050399b
- Start date
ah someone elese that took up FirstMac's deal.
it was incredible - i think it was funded with a hedged loan from Japan.
Yeah they dropped it by .20 or .25% to compensate for the dodgy manouvre by the PMG guy. But I am still paying more than their advertised rate (their rate used to be advertised on infochoice.com.au but it isnt anymore).
PMG are currently advertising at 5.06% (prob doesnt include the latest rate rise as he always delays putting the rate up on his website) so say 5.31%.
I am paying 6.14%. So how did that happen.
Actually when I get organised I am going to write a letter to the ACCC and the OFT because I still think the whole thing is dodgy what happened to me and I reckon they get away with it because they dont have the exposure of Comm. Bank et al.
Bringing up an old thread, sorry, but it seemed applicable... Was just wondering if anyone can confirm that Rate Busters "offset" account is indeed an offset account, not a redraw account.
Their brochure is a little hard to understand, they refer to it as a "redraw offset account" and mention
(http://www.ratebusters.com.au/docs/RB Fightback & Maxi 90 Features and Benefits.pdf)
So - can anyone help explain it for me? Looking to purchase (my first) investment property, and understand that an offset account is better if I want to sink all of my money into it, and take money out as I need it (to pay for personal living expenses etc) without tax implications.
Thanks
Why rate busters ?
ta
rolf
ta
rolf
They're just one of the ones that I'm looking at. This is the first time I've ever shopped for a home loan, I was only looking at the main ones initially (ANZ, CBA, Westpac etc), but I found a copy of the "Your Mortgage" awards, and they mentioned that the winners of the "Best Home Loan for Investors" were PMG, Homestar and Rate Busters, so I've started looking around a bit more.
At first glance, Rate Busters seemed to tick the boxes (including the offset account), but now I'm not so sure. I'm making an appointment to see a mortgage broker, but I'd like to get some of these things sorted in my head before I do.
Not picking on anyone one or any lender, but most of these industry awards tend to exclude lenders that dont do some form of advertising with them.
Best home loan for what sort of investor and on what basis I would ask ? I have always found it amusing with ratings sites that they have an index which they use which has very little application in the real world. The logic is simply to fuzzy.
Even one of our own industry rags came out the other day with " with the new raft of 95 % lending available.....................". 3 seconds of research showed that ther raft consisted of Adelaide bank anouncing the policy, and its dozen and a bit mortgage managers drip feeding the same news out over a week with their own branding.
These types of publications have their place for sure, but they cant replace what you are doing now, and that is to do some of your own research.
ta
rolf
That's an interesting observation - I work in a completely unrelated field, and we advertise in magazines, and that is certainly true, the articles etc focus more on the advertisers, which I can see clearly in my field. But it's certainly never something I never thought about in regards to these magazines - thanks for pointing that out.
Definitely - in any case, if not for that article, I would not have really looked beyond the top banks and what they offer, at least I'm more aware of what else is available, just by reading through. I wouldn't choose any product (not just talking about home loans) based entirely on someone else's recommendation, but it's always good to hear what others have to say about something, to assist in researching.
Now if I could just get my head around what their "offset redraw account" is, I'd be set
Now if I could just get my head around what their "offset redraw account" is, I'd be set
I reckon its exactly what it says - redraw, but dont use the product so cant comment for sure.
have a bo peep at what Richard taylor had to say.
RAMS have similar weasely words which could look like they are designed to confuse some borowers.
ta
rolf
From my personal experience with Ratebusters I would stay FAR AWAY.
When I first went with them they seemed very competitive but now even the big 4 banks have lower rates. I'm currently paying 7.07% which is higher then all there advertised loans and theres nothing I can do about it. I've been with them nearly 4 years and it is still going to cost me about $3500 for an early termination fee if I decide to leave.
Once you sign up they have you by the balls and can increase your rate higher while keeping there advertised rates lower knowing you cant leave without paying huge break costs.
Win/Win or Lose/Lose depending on which side of the fence your on
When I first went with them they seemed very competitive but now even the big 4 banks have lower rates. I'm currently paying 7.07% which is higher then all there advertised loans and theres nothing I can do about it. I've been with them nearly 4 years and it is still going to cost me about $3500 for an early termination fee if I decide to leave.
Once you sign up they have you by the balls and can increase your rate higher while keeping there advertised rates lower knowing you cant leave without paying huge break costs.
Win/Win or Lose/Lose depending on which side of the fence your on
Bringing up an old thread, sorry, but it seemed applicable... Was just wondering if anyone can confirm that Rate Busters "offset" account is indeed an offset account, not a redraw account.
Their brochure is a little hard to understand, they refer to it as a "redraw offset account" and mention
(http://www.ratebusters.com.au/docs/RB Fightback & Maxi 90 Features and Benefits.pdf)
So - can anyone help explain it for me? Looking to purchase (my first) investment property, and understand that an offset account is better if I want to sink all of my money into it, and take money out as I need it (to pay for personal living expenses etc) without tax implications.
Thanks
Well I'm glad you asked. This is my real life experience, not just speculating like a lot of others from this post.
Yes it really is an OFFSET. The way it works is they charge you the full interest payments on the anniversary date, and a few days later they credit back your account your offset component. A strange system, but it works fine.
I just came off 12 months honeymoon rate of 2.99%. My rate now is 7.26% - not the lowest, but not the highest. The reason I took this product was because I was going to pay off the majority of the loan within 12 mths, so I saved a packet in interest. If I wasn't going to do that, I would have taken another of their products (4.86% over 30 yrs)
Deferral fees can be high if you payout the loan in the 1st 5 years. But that doesn't stop me from loading my offset account and only getting charged minimal interest. Just make sure you don't pay out the loan.
So far no complaints
)))) and laughing all the way to happiness!!!So strange that I reckon you might have a fun time explaining it to the friendly auditor in some circumstances.
While those circumstances may or may not apply to you, its worth elaborating a little for those that see this as "just another fridge" coz its probably not.
A typical user of an IO facility with attached 100 % offset builds their Offset balance while not reducing their principal. They then convert the PPOR into an IP and use their offset balance to buy a new PPOR. This structure allows for holding the max tax benefit, while still giving u the benefit of reducing the interest bill.
The same structure is valid for an IP with an offset account.
Now Im assuming this little puppy doesnt work that way does it ?
Model
500 k IP
400 k loan, 200 k in the offset. The 200 k in the offset is TAX PAID money and not borrowed, and the borrower rightly uses their offset as a savings and trading account.
Assume rate is 5%, and lets work with generalised numbers and not specifics.
Monthly interest repayment is 1667.
Refund due to saved interest is 833.
The 833 refunded to the savings account may be regarded as a new loan, and the 833 may now no longer be deductible.
This process accelerates over time to eventually having converted all ur deductible debt to contaminated non dedutible debt. Sort of the opposite of a debt recycle strategy
Now, if one knows this is going to happen, there may be ways u can manipulate the product and its use to make it compliant, but I suspect there is no pre-sales disclosure of this issue, indeed id be surprised if there is disclosure at contract stage.
ta
rolf
That's definitely not an offset and will probably create serious problems with the ATO as Rolf suggests.
I'm guessing your 'refunded amount' could almost be considered income, which you'll have to pay tax on, instead of savings interest, you're earning it.
The reverting rate is about 0.5% higher than the average market rate. Honestly, it's a very average product you've got.
Ok, I'm about to clarify a bit further.
After reading your comments and checking my Ratebusters statements, here is how it works/reads as an example on the statements:
there is an offset account (titled "X OFFSET") linked/attached to the loan account (titled "X TERM FULL DOC LOAN")
28/2/10 Transfer credit $491.59 from offset acct to loan account (to pay P&I) balance -$114,679.96)
28/2/10 Loan Interest debit $158.54 (offset benefit of $105.63)
balance -$114,346.91)
*To me this still looks like an offset account structure and I doubt there would be any ato problems, but I am not a loan expert.
**There is no "refund" involved as I first thought, so apologies that was my BIG mistake**
Having said this, there is mystery about the product and the staff are not that informed either.
After reading your comments and checking my Ratebusters statements, here is how it works/reads as an example on the statements:
there is an offset account (titled "X OFFSET") linked/attached to the loan account (titled "X TERM FULL DOC LOAN")
28/2/10 Transfer credit $491.59 from offset acct to loan account (to pay P&I) balance -$114,679.96)
28/2/10 Loan Interest debit $158.54 (offset benefit of $105.63)
balance -$114,346.91)
*To me this still looks like an offset account structure and I doubt there would be any ato problems, but I am not a loan expert.
**There is no "refund" involved as I first thought, so apologies that was my BIG mistake**
Having said this, there is mystery about the product and the staff are not that informed either.
Ratebusters wins "Mortgage of the Year" for 4th time
*Ratebusters Fightback Product has in 2010 being voted Australia's best home loan once again.
see link below:
http://www.ratebusters.com.au/mortgageoftheyear.asp
The bottom line is that this company and product is not to be underestimated if you want to save money on your mortgage.
The onus is on you to do the homework and not just rely on Mortgage Brokers advice.
*Ratebusters Fightback Product has in 2010 being voted Australia's best home loan once again.
see link below:
http://www.ratebusters.com.au/mortgageoftheyear.asp
The bottom line is that this company and product is not to be underestimated if you want to save money on your mortgage.
The onus is on you to do the homework and not just rely on Mortgage Brokers advice.
Precisely this is why you need to do your homework
there is an offset account (titled "X OFFSET") linked/attached to the loan account
It is not a convenional loan account (First Mac are not licensed to hold deposits for one) it is a loan redraw as Rolf, Pete and others have now stated several times.
there is an offset account (titled "X OFFSET") linked/attached to the loan account
It is not a convenional loan account (First Mac are not licensed to hold deposits for one) it is a loan redraw as Rolf, Pete and others have now stated several times.
Tis close to what could be construed as misleading product disclosure, and Im surprised they havent been pulled up on it. Having said that, they are not alone, many of the "mortgages or runners up of the year" use comparisonswhich are designed to mislead from the start.
I will leave my rant at that
ta
rolf
If you're talking about the Rate Busters Fightback product, there are two things setting off alarm bells for me in Rate Busters' own documentation (which lead me to strongly believe that the many who claim this product would fall foul of the ATO are correct):
1) the offset account is called a "redraw offset".
2) On the top of page 4 of this link, it says (my underlining):
Danger, Will Robinson!
1) the offset account is called a "redraw offset".
2) On the top of page 4 of this link, it says (my underlining):
Danger, Will Robinson!
