First Home Buyer Seeking General Advice

Godric on 17/10/2017 - 18:15

Hey All!

Hope alls well and we now all have our USB LED Lights :)

Just seeking some opinions/advice, when searching and trying to work out a best deal on interest rates, is the aim to talk the down the interest AND the comparison rate? (Is that even possible).
Example NAB have a 3.69% 2 year fixed rate how ever their comparison rate is 4.86%, so would this actually be a good deal?
Who and or where is the best place to start looking or talking to, broker/bank? And are there any questions i should ask?

My plan is to take up an occupancy loan for 1 year, then refinance to an investment loan/property (Taking advantage of FHBG).

I understand this is fairly specific to each individual but again just seeking general advice or any input you'd like to share based on your own knowledge or experience.

Thank you!

Financial

Comments

  • tsunamisurfer on 17/10/2017 - 18:48
    +2

    I would suggest you speak with any of the major brokers first, they are free to speak with, ask them all the question you have because they are paid to sign you up.

    Have them take you through the various scenarios, they have all the calculators which will give you the sums you are after.

    They are able to give you info about :

    • Mortgage options.
    • Lending capacity.
    • Repayment amounts (under varius scenarios).
    • Conveyancing.
    • Insurance (LMI)

    Non-bank brokers will be more willing to look broadly across the lenders to give you the best deals but do your own research with the banks directly as well.

    This is how I learned.

    • Godric on 17/10/2017 - 20:33

      Excellent indicator for what first steps to take, thanks mate

  • Dont Care on 17/10/2017 - 18:49
    -3

    why would you bother switching to an investment loan after a year just to get the FHOG. If you cant afford to live in and pay off a home what's the point buying one.

  • BensonP on 17/10/2017 - 18:52
    +2

    No chance of getting any helpful information based on your info.

    What's you purchase price?
    What's your deposit?

    4.68% on a two million dollar loan is not good at all.
    But for a $200k loan, it's not bad.

    The higher the loan, the lower the interest rate.

    Cheers

  • pndl on 17/10/2017 - 18:58
    +2

    The comparison rate is calculated using a number of assumptions over 25 years on a $150,000 loan. The actual rate you pay depends on how close you are to the assumptions. Most likely you will not pay that much.

    For the 2 year fixed rate, at the end it reverts to a variable rate which is included in the calculation. For a $150,000 loan the variable rate at the end of the fixed period is quite high at 4.64% currently. So it's assuming you'll pay 3.69 in the first 2 years and 4.64% for 23 years, which is not necessarily realistic.

    On a $250,000+ loan it would actually be 4.39% (before negotiation). You should be able to negotiate rate discount for the variable rate at the end of the for below 4%. Some lenders allow you to negotiate the rate discount at the end of the fixed period upfront. If they don't you can negotiate once the 2 year period ends, and then refinance after 2 years if they don't budge.

    It also includes the fixed fees (such as package fee) into the calculation assuming a 150,000 loan.
    If you have 400 a year in fees this is 400/150,000 = 0.26%, whereas if you are borrowing 300,000 this is only 0.13%.
    So in reality you could be paying less in percentage terms if your borrowings are higher.

    • Godric on 17/10/2017 - 20:34

      That's an excellent break down thanks!

  • cassidy02 on 17/10/2017 - 19:11

    Ubank or Loans.com.au tend to have the best rates from what I've seen. We bought our house through Ubank with really no issues.

    We initially tried going through a broker but he took weeks to get back to us once he thought he had us in his pocket, and in the meantime heaps of houses we had our eye on got sold. Aside from his lack of communication a friend told me that in their experience, brokers can also slow down/cause settlement delays which can be costly. Hence why we dumped the broker way and just went straight to Ubank.

    We got pre approval before we went shopping, made it easier to know our definite limit.

    When you're budgeting, keep in mind aside from your mortgage (which replaces the need to pay rent) you've also got council rates, water rates and building insurance on top.

    • Godric on 17/10/2017 - 20:36
      +1

      Sounds like a mixed bag going through a broker, as like most things some have had both good and bad experiences.
      I've just been referred to a broker sourced through a friend who apparently is quite good so i'll see how I go with him and if it takes too long i'll go straight to a lender.

      Thank you for the tips!

  • rambutann on 17/10/2017 - 19:13

    Just FYI, you dont need to change it to an investment loan. Its your PPR, the loan will remain that way for the life of the loan whether its an investment or not. I would suggest going to a broker, refinancing to an online company (e.g. loans.com.au) or whoever is cheapest (as a PPR loan) then rent it out.

    Always look at the comparison rate, avoid the big 4 like the plague, go to a broker.

    • Godric on 17/10/2017 - 20:37

      Good to know didn't know that.

      And avoid the big 4 unless recommended by the broker yeah?

      • rambutann on 17/10/2017 - 22:58

        Basically. A broker will most likely get you a decent rate with a smaller bank like Macquarie or BOQ.

        I personally went through Aussie, probably wouldn't recommend but it was still an easy process and it really depends on who you get as a broker.

        • Godric on 18/10/2017 - 06:47

          Alright sounds good thanks for your input

  • Skramit on 18/10/2017 - 17:01
    -2

    Example NAB have a 3.69% 2 year fixed rate how ever their comparison rate is 4.86%, so would this actually be a good deal?

    No. Terribad deal.

    • [Deactivated] on 05/11/2017 - 20:40

      Am I wrong if I assume that 3.69% for 2 years is good because you can refinance the loan after 2 years (many banks cover the cost of refinance, e.g pay you 2k to do it)?

  • MelbourneWest on 21/10/2017 - 11:05

    Hi all

    We run a home loan cash back broker business and often get a lot of questions about comparison rate.@pondlet put it really well.

    If you want to work out what the true comparison rate is https://www.visionabacus.com/Finance/Australia/1/SuiteA100/6… is a great link

    Note we are not affiliated with that link, just for info purposes only :)

    For first home buyers, it is a daunting journey and easy to get lost in so much research and varying people giving you advice. AS long as you are dealing with an experienced broker with a good reputation, this is really the best start as they will find you the best deals that actually fit what you are looking for.

    Cheapest rate is not always the best and the tiny little online lenders…..there is a reason they are tiny most of the time :)

    Hope this helps

  • samprofs on 22/10/2017 - 09:45

    Hi the reason the NAB comparison rate is so high is due to the revert rate after 2 years it is ~4.4% per annum (depending on loan amount). This can be an issue if you are borrowing above 80%… NAB tiers their pricing in line with LVR's. Thus, even after 2 years you will be forced to refinance (more costs and potentially LMI again).

    I have an alternative product at 3.88% per annum 3 year fixed (3.84% comparison rate) with a revert rate of ~3.8%. 100% offset and unlimited ATM withdraws Australia wide. $395 package fee waived for the life of the loan.

    Feel free to shoot me a PM.

    p.s I am also a Melbourne based mortgage broker and happy to have an obligation/cost-free consultation.

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