Does my home loan deal with CBA get the OZB tick of approval or not?

Lohsotight on 20/01/2017 - 13:48
Last edited 01/02/2018 - 10:30

Hi Guys,

Want to check with the OZB community if CBA is still ripping me off and if I can get a better deal elsewhere. After threatening to leave they offered me the following rates.

I will be brief with the facts.

I am on the their wealth package with two home loans

PPOR – Rate is 3.98%

IP – is 3.88%.

Reason the IP rate is lower than the PPOR is since the mortgage broker at the time swapped these around to get the better rate.

Question is with total lending of $1M can I get a better deal than this with one of the big 4 banks or even 2nd tier?

Like most people I am inherently lazy in changing banks hence if it’s a $500 saving per annum its hardly worth the effort. Some might disagree but obviously personal preferences.

If you guys can share your views that would be great.

Financial

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Comments

  • [Deactivated] on 20/01/2017 - 13:59

    Im no expert but those rates look reasonable to me
    Its a stuff around having to move everything around to another bank
    Just remember rate rises and how they come into play, sure you might get a cheaper rate now and then when the RBA increases, CBA does not pass on the full amount but your chosen bank passes the lot on

    How happy are you with the Bank?
    Banks are good at ripping people off but at the end of the day, I would rather a slightly higher rate shorter term than be slogged each full point amount over the longer term not to mention moving cash around can be a pain

  • chumlee on 20/01/2017 - 14:08

    Those rates are good.

    If you have the money in your offset account for your PPOR why not just pay out the loan?

    • Skramit on 20/01/2017 - 14:20
      +2

      Flexibility to buy a new home or another IP without going through the new loan process.

      • ohsotight on 20/01/2017 - 14:25

        Yep this and leaves my options open for other investments that might come around. If there is another stock market crash I will have cash to get into some quality blue chips.During the GFC ANZ went down to 12 bucks! Imagine just the dividend on those now. Also if the PPOR becomes an investment in the future I can still negative gear it.

        Skramit thanks for your reply and yes I agree with you. At times not worth the hassle. And also since I have a bit of cash in offset I rather be with one of the big 4 as if ever there was another GFC the govenrment most probably cover the big 4 but not sure about other banks.

        Regarding whether I am happy with the bank, like most I am not. Have to send so many e mails to get a simple thing done.

        • chumlee on 20/01/2017 - 14:29

          Fair enough. Was just curious as my aim is to just smash down my mortgage as quick as possible but your offset is equivalent to it at the moment

        • ohsotight on 20/01/2017 - 14:38

          Yep I guess if you are 100% sure that your current PPOR is going to remian as such for the foreseable future then its fine to smash it down. But unless they are charging you more for interest only by having funds in offset you dont pay extra in interest but you also have the flexibilty of having a large sum in cash. I suppose a redraw is possible. Different ways to skin a cat I guess.

  • tomsco on 20/01/2017 - 14:26

    Impressive that the IP is lower rate than the PPOR with the same bank.

    Anyway, maybe move the funds in your IP offset to your PPOR. Interest is calculating at a higher rare in your PPOR so more $ spent and the interest you pay on your IP is tax deductible, whereas the interest on you PPOR is not.

    My 2c.

    • FiDad on 20/01/2017 - 17:03
      +2

      did you read OP post? he already got 100% of PPOR loan sitting in PPOR offset.

      • ohsotight on 20/01/2017 - 21:46

        Yep like I said it's 100% offset against ppor for tax purses. Banking is a different story

      • tomsco on 20/01/2017 - 22:56
        +1

        My bad, I read it as 350k outstanding, with 350k offset. Reading again I see the error of my ways.

  • paaj on 20/01/2017 - 16:31

    Good deal, we're having trouble keeping our owner oc as interest only. Banks want you to pay down the debt, even if it is 100% offset.

    Good on you for managing to 100% offset your loans. You're either super loaded or have good financial sense, or both. Either way, it's a good setup.

    • ohsotight on 20/01/2017 - 21:49
      +1

      Well I wouldn't say I am super or even moderately loaded think I be just proven to the bank that I can manage my finances from my younger years.. I talked them through my strategy.. The regional manager was happy with it and that was it. I suggest you explain yourself and should get a good result as well.

      End of the day like most ppl I just require the best rate as customer service with most banks is pretty abysmal.

      • virhlpool on 03/06/2017 - 12:39

        Just curious how did you manage to save so much? It's quite impressive irrespective of your age whatever it could be. Which profession are you in, in the finance field?

        • ohsotight on 05/06/2017 - 10:28

          It's pretty simple actually.. I have been using the same system since I was out of uni. Have an itemised budget on Excel of my expenditure and be realistic around spend. Hence have a miscellaneous allowance which will cover most out of the ordinary expenses. After I do this I know what my salary is hence I can project my savings for year end. I will only review this at 6 months to see if I am on track and then at the end of the year. I have generally done better than I expected in the last 10 years.

          End of the day your salary is somewhat fixed and what is variable is your expenditure hence this is mainly the only thing you can control. Its not rocket science. My aim is not to be wealthy but I do what to acheive financial freedom by the time I am 45 so that I dont need to be a slave to the dollar. You never know when you will get the tap on your shoulder hence you need to be smart when you are young and let the power of compound interest work in your favour.

        • virhlpool on 05/06/2017 - 22:28

          @ohsotight: Thanks for the post. It makes sense. Unfortunately, with 3% interest in savings account (and average 30% yearly income tax on it), unfortunately power of even compound interest doesn't seem to be going too far. I will be glad if it beats even inflation. Am I missing something there?

        • ohsotight on 05/06/2017 - 22:37

          @virhlpool:

          Well it depends what you are doing with your savings. If you have a house loan and your savings are 100% offsetting this then your return on your money is more likely to be close to 4% as a risk free return. Also the grossed up return is more than 4% since you are not paying any tax on this interest saving. When interest rates eventually go up the risk free return actually increases. Further the compound interest is also working for you being your home appreciating most probably by 10% per annum over a long period of time.

          If you don't have a home loan maybe you should look at starting to own some good quality shares and build a portfolio. Do you research and be patient until the next market correction comes and then buy some quality companies to hold for the long term. Highly recommend you read one up on Wall Street by Peter Lynch if you want to start building a portfolio.

        • virhlpool on 06/06/2017 - 20:45

          @ohsotight: Yup.. Portfolio of right real estate also might serve the purpose.

  • ohsotight on 05/06/2017 - 10:27
    +1

    a

  • dealsniper on 06/06/2017 - 16:20

    what's a good margin discount off svr for a reasonable sized investor loan at cba today?

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