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Any recommendations on a particular home loan?

Discussion in 'Finance & Banking' started by Sk3tChY, 29th Sep, 2011.

  1. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Bought my second IP and am trying to decide which lender to go with. I've taken a look at most of the major lenders and thus far the top three I've found seem to be:

    ANZ - Breakfree Package - 6.80% (1.00% discount)
    ING - Orange Advantage - 6.89% (0.35% discount)
    Bankwest - Premium Select - 6.85% (0.85% discount)
    NAB - Choice Package - 6.97% (0.70% discount)

    My only requirement is that the loan have an offset account. It will be for an investment property so I'd like to be able to withdraw the money and be able to claim maximum deduction when it comes time to purchase my PPOR.

    It seems to me ANZ probably have the best deal going around at the moment, but would be keen to see if there's anything better out there.
     
  2. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    You have probably settled already so this may be a little late. They are all reasonable lenders and I have used them all for clients (and myself). Rates move over time between lenders so getting a life of loan discount is valuable. If you just have IP's then an offset is the right way to go and set the offset against whichever loan has the higher interest rate for best effect.

    As to better rates, it will depend on LVR and loan $. Without knowing either then I cannot add much to this.

    Depending on your timetable, I would consider a fixed portion split at this time for 2 or 3 years, some very competitive rates here and well under standard variable and even discounted variable, that is unusual. I am not a big fan of fixed rates generally but sometimes they make sense in terms of rate.

    It also depends on your goals, if you are looking at adding to your portfolio, then work out borrowing capacity and look to use the lenders with the lower borrowing capacity first.

    Who did you end up going with?
    Greg
     
  3. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Hey Greg, thanks for the reply.

    I ended up going with ANZ, they seemed to have the lowest interest rate and were easily offering the best discount on their standard variable. I'm settling early this November.

    I've got 2 IP's now and decided to consolidate rather than have 2 separate loans - This ended up giving me the maximum 1% discount with ANZ.

    With regards to fixing the interest rate on a portion of the loan - It's been said multiple times on the news that RBA have hinted at dropping rates (around the time of the Melbourne Cup I believe).

    That being said, I've decided to hold out for a little while and see what happens with interest rates before considering a fixed rate.
     
  4. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    ANZ is a good lender, but don't confuse RBA cash rate movements with fixed rate movements. These are more governed by long term bond rates and availability of funds and market share grabs by lenders, I will be surprised if fixed rates stay this low for any length.

    Don't wait too long if you intend to fix.
    Greg
     
  5. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    So what you're saying is even if RBA were to drop interest rates next time round, the fixed rate wouldn't drop along with it?
     
  6. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    I have attached a graph of 10 year Aust bond rates and another showing the spread between the two.
    As you can see, there is no direct correlation with RBA cash reserve rates.

    The bond rate has gone up slightly this month and it tends to head in one direction for a period. The bond rates are historically low so if you are thinking of fixing, consider it sooner than later. I am not suggesting you should, that depends on your own goals and timetable, more I am just giving a heads up of the

    I suggest you have a look at the following RBA site to see different interest rate movements across a wide range of products to get a view how different rates work and different countries also.

    RBA: Chart Pack-Interest Rates

    Good luck
    Greg
     

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