Hi Gidget, I applied for a loan about Oct last year. The guy I rang would not visit my place as have say Aussie and Wizard. I had to go and see HIM. I thought Ok OK what the hell. It took them about 3 months to call me to give me a pre-approval. He said it was due to Xmas being so busy but I don't buy it.
They DO have extremely competitive rates but I have learned from experience that after sales service even with a home loan as well as a long term relationship with your lending manager are more important. I personally don't have a problem paying another quarter percent for this privelege although many would disagree.That's why I'm with Wizard. The service is SUPERIOR to any other lender I have spoken to. My lending manager at Randwick has been brilliant!!!.
Yes they are cheap arent they, but serious investors, can use many of full service banks (some would say thats an oxymoron)that offer fully featured lines of credit blah blah blah at rates that no non bank lender can compete with, like around the 5.50 % variable.
Like with all things in life there is a a value for money equation which results in some people buying 2 alkaline batteries that last for 10 hours for $ 4, yet there are others that prefer to buy 50 carbon batteries that cumulatively last 8 hours yet still cost $ 4. There is no "right or wrong" just perceptions.
I broke my loan with Resi because I was refinancing and it cost the equivalent of the first month's interest payment.
Resi sure were better than Homepath! Assured Home Loans were slightly better than the other two, in my experience.
Hi Rolf, you know that I am always grateful regarding the wealth of knowledge you give to everyone freely on the forum. Just further to your post though, smaller institutions like RESI have a current variable rate of 6.60% (29 year loan with Int only period of 10 years)(0.10% diff), or take say the Gateway Credit Union with a variable rate of 5.50%. Neither charge any ongoing fees unlike many of the banks. You did say however, that I would still lose out on a less sophisticated line of credit. Would you mind providing more details on this please. If the rates are just as competitive with some of these smaller lenders and the service is generally a lot better (Feel free guys to have your say on this matter - I could be wrong),even if the big banks LOC's are more sophisticated, is this enough to warrant the banks product to be better overall?
Im not down on the little guys, We use Rams, Heritage Building Society, Bendigo Bank (the one thats setting up all the community banks), Interstar, IMB, ING, FAI, etc.
There will always be niche providers that will fit particular needs, please note though that a lot of the smaller lenders prefer not to use the broker's channel, hence their products are not available AND we dont get paid a brazz razoo. One could see this as being ohhhh, well this must mean brokers only place products or lenders that pay, or pay the best. I will leave this in the hands of those that know reputable brokers - our surveys have shown that better than 85 % of broker clients feel that they have received the best product for their needs.
Nor would I say anybody would lose out on one product over another - what it comes down to is what an indiviual's needs and what their perceptions are. I learnt a long time ago that if your client wants a red car dont try and sell them a blue one. Find a red one and make a win win situation.
The typical 10 year interest only product you are describing from Resi is available from others including Adelaide bank, although at a higher rate, also Aussie have a 20 year interest only product. All banks now have a 20 to 30 year interest only product.
A Line of Credit may not be suitable for a lot of people's spending styles, or for tax reasons a part offset account may be better.
The real advantage with an LOC for some people is that it is interest only for 30 + years and when doing a refinance the lenders tend not to care what you do with the money.
When you can get 5.47 % LOC or offset account with an annual fee base of $ 300 per year with zero application fees from Westpac as an example(> 250 k borrow and > 60 k income) even if you have 30 loan splits.
Or CBA 4.89 for first year rolling to 5.57 with no upfronts and an offset account with a lend of more than 250 k, and carded fixed rate discounts of up to .25 off what are already good rates.
etc etc etc
Most of the majors products can also be cocktailed to produce almost any result that you can get with a non bank lender EXCEPT as you say that crappy service most appear to get from the major banks.
Combined this the typical convenience of most banks of internet banking, pay anybody, a national (but shrinking network), blah blah blah.
If you are intent on going small for wahtever reason in most instances you are usually better off with a credit union since most(note not all) of the other non bank lenders clobber you with exit fees varying between 1 to 2.5 % of the original loan amount if you exit between 1 to 5 years(coming down over time). This is called cost recovery of setting up the loan by them.
I call it anti-competitive behaviour, since if you can lock in your fee base for 3 to 5 years you have made your $ and this is where the issue of no ongoing fees becomes a moot point.
One other small issue is that of small loans. A lot of the smaller lenders dont want the small loans of say 30 000. They cant make moeny on these due to the apparent low fee base.
I have recently received an email from a person who has been having some real fun with a high profile non bank lender who basically said go away. It was a major that not only fixed their problem, but appears to have gone way beyond the call. I hope that person posts their success.
In closing this novel, I stand by my experience that cheap rates ( from ALL sorts of lenders) almost always have hooks attached to them. These hooks are not much of an issue if you are buying a single home or 1 IP but can become a huge stumbling block when building a portfolio
Average annual percentage rate is the fairest way of comparing an orange to an orange. Factor in all fees, including early exit fees. The problem as I see it a lot of lenders will have you believe an orange is a carrot because its the same colour.
Should you happen to be in a superfund that qualify,check out Members Equity formerly Super Members Home Loans. There are no application or valuation fees or ongoing fees
and variable rate of 5.49%
With Members Equity formerly Super Members Home Loans,
They do advertise lot at work and few people did ask for loan, which is obvious.
With first one or only one loan it was OK, but with second one (including refinancing the existing one with them) or any loan for whatever reason it was very difficult.
Then they went to normal bank and got it straight away. And it was not just one person but quite few who had difficulties with them.
I just remembered one important point that didnt make it into the novel.
Beware of low variable rates, there may be a big punch when you NEED to convert to fixed.
Many small lenders fixed rates are unattractive to say the least. Resi is a good example, really cheap variable rate but look at the fixed rates - not flash at > 6.99 for 3 years. This is in a market where CBA has a 5.99 for 3 years and the middle of the market is around the 6.5ish.
Yes you can just move to another lender when you NEED to fix rates, however remember it may cost to get out and refinances take time, sometimes lots of it.
I suppose thats only an issue for those with a biggish portfolio that may need to fix at some point. Once again it should not bother the 100 k loans too much.
There are also housing co-operatives that will lend down to $1000 and up =to $115,000 on 95% LVR with 30% DSR and all debts 35% --- and even if =you are on unemployment benefits, or Centrelink benefits. Unfortunately =income must be less than $55,000, loan are over 23 yrs and house value =must be under $185,000 but this may increase with government lobbying. =BUT very easy to get a loan though if you fit the criteria as they are =the originator and source of funds, no LMI.
For loans above %115k, they have personal finance. Cheap fees. eg fee =on say a $30,000 housing co-operative personal finance loan is $50 at =6.5%. Cumberland Home Loan Group is made up of Parramatta & Distirct, =Hornsby and Coastal, Fairfield, Ettalong, & Central Coast Housing =Co-operatives. All non profit and they will do ip loans as well as home =loans. Office at Penrith, Parramatta, Hornsby and Gosford where I =live... 02 43234033.or firstname.lastname@example.org.
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There are also housing co-operatives that will lend =down to
$1000 and up to $115,000 on 95% LVR with 30% DSR and all debts 35% --- =and even
if you are on unemployment benefits, orCentrelink benefits. =Unfortunately
income must be less than $55,000, loan are over 23 yrs and house value =must be
under $185,000 but this may increase with government lobbying. BUT very =easy to
get a loan though if you fit the criteria as they are the originator
andsource of funds, no LMI.
For loans above %115k, they have personal finance. =Cheap
fees. eg feeon say a $30,000 housing co-operative personal =finance
loan is $50 at 6.5%. Cumberland Home Loan Group is made up of Parramatta =&
Distirct, Hornsby and Coastal, Fairfield, Ettalong, & Central Coast =Housing
Co-operatives. All non profit and they will do ip loans as well as home =loans.
Office at Penrith, Parramatta, Hornsby and Gosford where I live... 02
There are certainly opportunities out there for discounted rates eg. you may need an income of > $60,000pa plus mortgages of > $125,000, but don't be surprised if you don't find out about them on Bank Websites or leafing through the comparison tables of 'Your Mortgage' Magazine. They are often simple not there!
I guess this is really where a good Mortgage Broker can be of assistance to you.....
*DING DONG ......I think that was your queue Rolf! Ta.
As mentioned by Alan high income earners are eligible for discounts on their home loans. Professionals such as doctors, accountants and engineers can also be eligible for professional loan packages. Another way to get an interest rate discount is to buy shares in the banks. Some banks offer interest rate discounts (among other things) to shareholders.