What questions should i be asking my broker

[z611143]

I am looking to go with a fixed rate (no offset obviously) to start with as i wont be putting money into my offset as i need to pay back the rents for some minor help and also potentially to study next year, which will limit my income if i wasnt doing those studies, however not by much. I will just be a busy man, which is how i like it these days.

These are the potential options he has given me for fixed/variable/combination

Fixed Rate Only:

? Bankwest 2yr Fixed Rate ? 4.59% ($295 Upfront & $12 monthly fee/ No Offset)
? ING 2yr Fixed Rate ? 4.59% ($220 Upfront & $199 annual fee/ No Offset)
? ME 3yr Fixed Rate ? 4.59% ($350 Upfront & $0 monthly fee/ No Offset)

Variable Rate Only:

? ING 4.89% Ongoing rate ($220 Upfront & $199 annual fee/ Free Offset)
? Westpac 4.84% 2yr Intro rate ($0 upfront or ongoing fees/ No Offset)
? Bankwest 4.93% 2yr Intro rate ($0 upfront or ongoing fees/ $12pm for an Offset)

Mixed Fixed & Variable:

? Bankwest ? 2yr Fixed 4.59% & Variable 4.93% ($295 Upfront & $12 monthly fee/ $12pm for an Offset)
? ING - 2yr Fixed 4.59% & Variable 4.89% ($220 Upfront & $199 annual fee/ Free Offset)

Bolded are the ones he recommended for me

Sort of looking at the ME fixed option. However what questions should i be asking.

Im probably not looking at doing anything again in the next 2 years building/buying/development wise as i will look to start a new study option, so what appropriate questions should i be asking him about these loan/lender options?

Thanks
Z6

 

[Peter_Tersteeg]

The right decisions probably depend on what you want to do in 2 years, with consideration to the loan amount, LVR and your current and proposed incomes.

The ME Bank option is one of the cheapest fixed rates out there, but after that it's going to be quite expensive. If you borrow more than 80% it may be a very expensive proposition to refinance later and you'll probably be paying 0.5% too much.

ING has fairly average serviceability for investors. If you want to invest later, chosing them now could mean refinancing in a few years with potential expenses. I can say the same for BankWest.

It's also worth noting that the ING rate you've quoted is only accurate if you also have part of the loan as variable.

I don't think it's a matter of 'questions' you need to ask a broker. You need to ensure your broker understands your circumstances and where you're headed. You then need to have a discussion about the recommendations and how they meet those goals both now and in the future.

So far the options mentioned are focusing on interest rates. IMO this is fairly short sighted. Keep in mind that a 0.1% interest rate difference accounts for $100 / year for every $100k you borrow. Often focusing on the rate is not as cost effective as some people believe.

 

[westminster]

Are you sure you don't want an offset? They really are the handiest things for putting away even the tiniest bits of cash over the next two years.

I don't use them in the traditional Resi mortgage way but as a transactional kind of dumping and savings area. My pay is not put into it. But the property rent is and money that I have saved up for that project.

Over the next few years you will need to save up for construction and the offset is a good spot to put that money.

 

[Jess Peletier]

I agree with Pete.

I think what your seeing here might be the difference between a transactional broker and one that specializes in investment lending. I don't think many of the brokers here would generally recommend any of those lenders first up (unless a special situation, policy niche requirement) except perhaps WBC. Ask about CBAs intro rate too if you're after one, that's a 3 year.

Those lenders are generally better for a set and forget home buyer.

 

[Rolf Latham]

What's the end game for you

Your broker can't answer that for you per se but should be able to help you with some tools

Ta

Rolf

 

[D.T.]

Depends what instructions you go to the broker with.

Same as a car dealer - you say you need to cart your soccer team around vs you need to reach 240km/h on autobahn, you're going to get very different vehicle suggestions.

If you go to the broker and say this is going to be my PPOR for 30 years vs this is 1st of 10 IP purchases this year, same dealio.

 

[Jamie M]

Seems to be too much focus on rate here.

Agree with Jess - a few of those lenders don't usually spring to mind for me when dealing early on with investors.

Cheers

Jamie