[AMA] I'm a Mortgage Broker, I Like Saving Myself and Others Money! Ask Me Anything!

Lmortgagebroker on 22/10/2018 - 19:14
Last edited 22/10/2018 - 22:20

Hi all,

I'm a mortgage broker, have been in the mortgage industry since 2012.
Don't like seeing poor advice or bad deals so decided to jump on here and make a post and help out when I can.

I'm the kind of mortgage broker that informs my customers of the eBay Good Guys special to upgrade their whitegoods.

Here to answer any questions you have about your home loan and mortgage products.

Comments are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.

Introduce Yourself

closed Comments

  • jaybmate on 22/10/2018 - 19:43
    +1

    Do brokers ever recommend going for the loans from smaller banks that often have lower /lowest interest rates? And why or why not? What are your thoughts on it?

    • mortgagebroker on 22/10/2018 - 19:52
      +6

      Yes.
      Majority of my clients are with smaller lenders.

      I choose the best product available for that particular client at the time. Products and specials change very often so the best loan for you this week might not be the same as it was last week.

      Tip: Ask your broker for a selection of lenders, most will give you up to 3 options and recommend one. If they are all with major banks it might be an idea to question this more or even ask at your first meeting that your requirements are for a smaller bank and a low interest rate.

      • cloudy on 22/10/2018 - 20:23
        +1

        Oh wow, sounds like supermarket weekly catalogues. Should I head to you to change my mortgage every week?

        I guess you would get a good commission every time too? Win win for me and you?

        • mortgagebroker on 22/10/2018 - 20:49
          +11

          Obviously there are fees involved to refinance which means it's not really viable to change unless you have an extremely large loan or there is an extremely good offer.

          I would suggest to check your home loan every 12 months and generally refinance between every 2-6 years depending on your loan.
          A good broker will do this for you every 12 months and let you know if it's a good time to change.

          Mortgage brokers get clawed-back their commision from lenders who refinance or payout their loan within the first 18-24 months (depends on the lender)

          Change within the first year is never a good option fee wise and if it is you were probably put in the wrong loan to begin with.

          A simple phone call to your back to get a reduction of 0.3% is usually always better than refinancing to get 0.4% better rate. tip here is to get a good mortgage broker.

          • reshre8 on 23/10/2018 - 05:10
            +2

            @mortgagebroker: If I am using a mortgage broker and he is not good at his job in terms of my benifits (i am with commbank 3.94 variable and 4.17 comprehensive) can i call my bank to give me a better deal instead or am i bound to this contract.

            • mortgagebroker on 23/10/2018 - 11:31
              +1

              @reshre8: You are more than welcome to call your bank directly to get a better deal, or ask for a better rate.

              A mortgage broker may provide you with a "Quote" which may have a clause on it saying if you refinance or pay out your loan within 24 months that you must pay them any commission lost. This will be your only issue.
              Most lenders will clawback the commission paid if a client refinances within 18-24 months.

          • Thenarrator on 24/10/2018 - 22:21

            @mortgagebroker: you sort of contradicted yourself. A good broker will advise you refinance every 12 months. They will have their commissions clawed back if refinancing is done within first 18months. What incentive is there for them to cut a hole in their own pocket and have their commissions cut back. Its literally doing extra work to get paid less. no logic.

            • mortgagebroker on 25/10/2018 - 12:34
              +1

              @Thenarrator: A good broker will review your loan every 12 months.

              As I said above…
              I would suggest to check your home loan every 12 months and generally refinance between every 2-6 years depending on your loan.
              A good broker will do this for you every 12 months and let you know if it's a good time to change.

    • virhlpool on 26/10/2018 - 20:45

      Smaller lenders are often tight when it comes to equity release. So, investors with pre-determined goal of the equity release in near future go for the bigger banks which are more flexible (easier) with valuation, eligibility and equity release. Things would have changed in the last few months though with APRA tightening rules lately.

    • mortgagebroker on 22/10/2018 - 20:00
      +4

      What kind of bargains would you want from your mortgage broker?

        • mortgagebroker on 22/10/2018 - 20:41
          +130

          Acer Predator XB271HU - 27" IPS LED-backlit LCD monitor w/ USB 3.0 hub
          $999 with 20% off ebay deal from futu_online might work for you.
          + 1% off on cashrewards and flybuy points through ebay

          $799 + $7.99 cashback + 395 flybuy points

    • mortgagebroker on 22/10/2018 - 20:08
      +9

      As for bank offers

      St.Geroge Bank - $2,000 Refinance cashback* - Offer available until Monday 31 December 2018 and can be varied or withdrawn at any time
      Bankwest - $1,500 cashback for new home lending* - Promotional Period: 17 September 2018 – 30 November 2018
      Virgin Money - 20,000 Velocity Points for every $100,000 drawn at settlement - Offer available until 30th November 2018

  • sir_bazz on 22/10/2018 - 20:10

    Thanks for this.

    What IR are lenders currently using for stress testing new investment loan applications?

    • mortgagebroker on 22/10/2018 - 20:31
      +1

      It all comes down to income/expenses, assets and liabilities. Lenders have a buffer on their own calculations for all loans.

      You need to prove you can afford the loan through income (payg, self-employed, rent) and have enough to cover the new loan and existing debts.
      Remember when you take out a new investment loan your income will increase as per the rent earned on the new property.

      • dandandan on 22/10/2018 - 21:58
        +1

        I am not a broker however your below statement is not correct. A quick google will tell you borrowers are discounting rental income and if you want the real proof this can be confirmed in guidelines from APRA.

        "Remember when you take out a new investment loan your income will increase as per the rent earned on the new property."

        A few comments below this is a concern as well, as If most clients only need a redraw account where is your warning the lender could restrict access to the redraw etc etc.

        • mortgagebroker on 22/10/2018 - 22:18
          +1

          Yes, rental income is shaded 80% by most lenders.

          Comment are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.

          Thanks for your comments.

          • dandandan on 22/10/2018 - 22:24
            +1

            @mortgagebroker: You need to be careful for your own sake. I don't think my two examples were general comments, I would edit them if you.

            eg. some rental income form an investment property may count towards your income when purchasing an investment property.

            a redraw account or offset can help reduce interest payable on a loan. A lender may restrict access to extra repayments made into the redraw account.

            • HighAndDry on 23/10/2018 - 09:53
              +16

              @dandandan: The guy is answering questions on an online forum. They're basically general advice/answers by default.

              • [Deactivated] on 24/10/2018 - 12:22
                +3

                @HighAndDry: Nannystate gonna nannystate

        • [Deactivated] on 24/10/2018 - 12:26
          +2

          "Remember when you take out a new investment loan your income will increase as per the rent earned on the new property."

          This statement is correct though.

          ""Remember when you take out a new investment loan your income will increase as per the rent earned on the new property but it might be discounted by lendors."

          This was probably the "correct" qualified statement you were looking for but it does not make the first statement incorrect.

    • miwahni on 22/10/2018 - 23:21
      +6

      Interest rate for stress testing (BMR - benchmark rate) can vary between institutions. Where I work it's a flat 7%. Mortgage insurers BMR is higher; QBE IIRC is 7.25% while Genworth is 7.25% OR the actual rate of your loan + 3%, whichever is higher.

      • sir_bazz on 22/10/2018 - 23:33

        Thanks man. That's what I wanted to know.

        Looks to be unchanged from some 12 months ago.

        • mortgagebroker on 23/10/2018 - 00:10
          +3

          7.25% is the norm for most lenders
          I don't think this will change anytime soon. I hope it doesn't; it was a big change when it was introduced.

    • vid_ghost on 23/10/2018 - 15:41

      7.25% rate rise is what the assess you on.. its pretty high

      • miwahni on 23/10/2018 - 21:33
        +5

        Yeah it seems pretty high but I'm old school enough to remember when our variable rate was 17.25%pa. I can't imagine we'd ever reach that peak again - but even prior to the GFC the variable was hovering around the high 8s, and that was only ten years ago. I can't recall what the BMR was at that time - I was working for one of the regional players back then - but it's usually a good 300 basis points at least higher than the applicable rate. That's the equivalent of 12 rate rises, if the RBA continues its usual habit of lifting the rate by 25 basis points at a time.

  • uk3000 on 22/10/2018 - 20:29
    +1

    Now that the major banks have raised their interests, what would you still consider a great rate for a 400K loan with offset account (owner occupied)? And what would be the loan service fee for that? Ta.

    • mortgagebroker on 22/10/2018 - 21:02
      +8

      Under 80% LVR
      3.69 with $395 yearly fee
      Beyond Bank has a special at the moment of 3.79%pa (3.79%pa comparison rate) with offset with no ongoing fees.

      anything under 4% is a good rate.

      Obviously depends on the client, loan size.

      Most people don't need an offset account, they just like the idea of it. I try and educate my clients as some only need a redraw account.

      • uk3000 on 22/10/2018 - 21:14

        Thank you. Speaking of a regular loan with a redraw, what would be the best rate for that one?

        • mortgagebroker on 22/10/2018 - 21:32
          +1

          3.64%pa (3.64%pa comparison rate) or 3.69%pa (3.69%pa comparison rate) with no ongoing fees

          • uk3000 on 22/10/2018 - 21:49

            @mortgagebroker: Hmm it looks like UBank currently offers 3.59%pa with no ongoing fees, is there any catch?

            • mortgagebroker on 22/10/2018 - 22:09
              +1

              @uk3000: No catch.

              You have to do it yourself and deal with credit assessors who may not care about your experience.
              If its a sub 80% refinance go for it. If it is a purchase or construction and above 80% you will probably regret the decision or have a better option somewhere else.

              I have a product 0.10 higher offered by the same funder as UBank (Advantedge Financial Services) with an included eftpos debit card linked to redraw. (Great product)

              • evolution-flip on 23/10/2018 - 00:45

                @mortgagebroker: I have a current loan with Advantedge with 3 years fixed at 4.32% ending in a month and 4.25% variable. These are terrible rates now.
                What are some of the fees if I'm looking to refinance with a major bank?

                • mortgagebroker on 23/10/2018 - 00:58

                  @evolution-flip: Depending on your loan amount I would even look at asking for another 3 years fixed or doing an internal refinance with Advantedge.

                  Discharge/exit fees
                  Application/establishment fee
                  Settlement and handling fees
                  Mortgage registration
                  and more

                  This can be up to and more than $1000 depending on the lender.

                • ely on 23/10/2018 - 21:45

                  @evolution-flip: For Advantedge, $350 exit fee, plus variable costs to break the fixed.

                  $114 mortgage registration and deregistration (in VIC, varies by state).

                  Variable costs with the new provide lender to set you up.

              • ely on 23/10/2018 - 21:43

                @mortgagebroker: I'm with them and am considering jumping next year; rates are good but not the best, uBank has a better offer. Only issue with uBank's earlier cashback offer was that they wouldn't offer it to NAB group lenders (uBank, NAB, Advantedge), so was considering taking advantage of Westpac's velocity point bonus, cashback and other negotiables (lower rates, waived package fees) for a short time before jumping again.

                Given that the cashback would cover all the costs of the refinancing (and then some), is there any reason not to? What's the minimum acceptable time to stay with a lender?

                My Advantedge rates are 3.86 variable and 3.74 fixed, fix expiring in Feb.

                • mortgagebroker on 23/10/2018 - 22:21

                  @ely: Only issue is multiple hits on your credit report and the time taken to apply.
                  If you did this once I'm sure it would be fine. If you did it again you may not get the loan approved. Lenders will question the quick change, you just have to have a decent reason.

                  • ely on 24/10/2018 - 08:12

                    @mortgagebroker: Yeah, my credit history is interesting, especially with positive credit reporting coming in. On the cons, lots and lots of credit card applications (although never more than four in a year). On the pros, a perfect repayment history and nothing negative except for lots of credit card applications :D

                    Time taken is not so bad with a broker, you guys do all of the hard work ;)

            • vid_ghost on 23/10/2018 - 15:45

              @uk3000: I'm with Ubank.. had to do an ID check at the local post office… it was allot of paperwork but every home loan and refinance is .. cant avoid it :) They gave me 10 years interest only lol..i called them 1 year in and changed it to interest + principle .. Not sure why i had 10 years eheh

      • EnALup on 23/10/2018 - 09:47

        What is the main difference between Offset and redraw if we want to deposit money on say monthly basis to it along with withdrawing it when required.

        • mortgagebroker on 23/10/2018 - 11:51

          Not much really depends on your requirements and the lender.

          Some banks will lock away redrawn until loan payment is made, which can be an issue.
          Some people will require card access.

          If you want something that works like and every day transactional account then Offset is what you want.
          If its a place to hold some excess money (a few thousand) than you might need to access every few months a redraw is all you need. (also paying a fee for an offset of $300+ which has $10,000 savings in it, you will generally save more money not having an offset and saving the fee)

        • whoopdeedoo on 23/10/2018 - 13:14
          +11

          the main difference is the tax implications if you turn your o/occ properpty into an investment property later on. if theres a chance of this, leave your extra funds in your offset account instead of paying it into your loan.
          because.. if you paid it directly into your loan, and redrew it later on and used it for non-investment purposes, the entire interest costs is not deductible… & quite a headache when you process your tax returns.

          • mortgagebroker on 23/10/2018 - 14:15

            @whoopdeedoo: 100% correct. You should be talking with your mortgage broker about your future plans for the property so they can structure the loan correctly.

  • Riczter on 22/10/2018 - 20:42
    +7

    My parents are in a tricky spot with their house, I wonder if you want to weigh in with some general advice?

    Parents bought land 5 years ago in Beeliar 6164, Built a 4x2 house on it 3 years ago, and have been living in it. They have $450k mortgage with westpac and have been paying interest-only the whole time as they were only just keeping up with the payments and couldn't afford to pay more due to Dad not able to get enough work. The interest-only period is ending February 2019 and they wont be able to afford the repayments when it changes over to Interest and Principal.

    There was hope of being able to extend the interest only period, but we believe that is no longer the case as I believe Westpac has been tightening restrictions on interest-only loans. The original plan was to extend to the max 10 years and then sell hopefully at a profit. Now we are looking at having to sell in Feb 2019 after only 5 years and after house prices have been sliding - banks property valuation puts the house at 330k, similar houses in the area are on the market for around $420k (don't know why theres such a big difference, making us nervous…), so best case we sell at a loss and still owe the bank 30k.

    Dad's 64 - self employed, bringing in around 30-50k per year inconsistently- but slowing down and looking to hang up his boots - he has about 50k super which he has withdrawn and plans to put a chunk into getting the house finished and ready for market (house needs about 15-20k work on landscaping, fencing, etc, leaving 30k left, which would even out the remaining 30k owing on the mortgage if it sold at $420k) Leaving him with nothing and living off the pension once he turns 66.

    Mum's 55 - working full time at bunnings, making 750 per week $40k per year consistently. with a 13 year old child to look after.

    Current mortgage repayments are about 1550 per month. This is expected to rise to around $1700 after February if they extend the interest only period, or around $2800 per month if interest and principal. The big jump is because there is only like 12 years left on their mortgage. The short time frame on the mortgage is whats killing them, there is no way they can service $2800 repayments.

    There have been a few options thrown around -
    1: Downsize - sell and buy a smaller house
    2: Rent out this house and then go and rent a smaller house - net profit, as long as the house has a tenant. Likely allow us to keep the mortgage interest-only, and hold onto the house in the hope it will increase in value.
    3: Sell this house and go rent a smaller house.
    4: Go live in a caravan.

    I've been leaning towards option 3 - My advice has been to give up on the property market, they were stung big time during the GFC, and have been having a bad run on the property market ever since. They were hoping to hold onto this house until it could realise a profit, but this doesnt seem to be happening and forecasts seem to indicate more of the same for the short to mid term future. Selling and buying is just going to waste more money in real estate fees and other fees, and renting it out is risky, if they cant find a tenant for a couple months then they are going to go into debt very quickly with no savings and living week to week.

    Dad keeps looking for a magical way to come out ahead, but I just don't see it.

    My question to you is: Is my advice to my parents sound? Am i steering them on the right track? My thinking is that no bank is going to offer them a new mortgage or refinance them with better rates at this late stage in their life with such limited income. Is this true? Or do you think there is a possibility they could refinance and keep the house??? Is there another option I haven't thought of?

    The bank hasn't been willing to say for certain what they will do/offer come February so that doesn't help us. The parents are going to see a financial advisor soon, but I'd appreciate your professional unbiased opinion on the situation if you feel like offering it :)

    Thanks

    • watwatwat on 22/10/2018 - 21:03
      +17

      Dad keeps looking for a magical way to come out ahead

      Yeah, it's called living within your means.

      Sounds like daddy won't be hanging up boots any time soon.

    • mortgagebroker on 22/10/2018 - 21:18
      +5

      Hi Riczter, I would suggest they go and get some advice sooner rather than later.
      If they were going to sell and it takes them 6 months to sell they will not be able to afford the P&I repayments while waiting for it to sell.

      From the information you have given I believe it is sound advice.
      I have no idea how they go the mortgage in the first place???

      Westpac gave them a mortgage of 450k for a block of land and build and the build isn't finished… something has gone wrong here.

      450k loan on 330k property is not a good sign.
      Best case they sell for 420k is still not a good result.

      The banks will not look favourably on giving a mortgage to someone at retirement age with no super.

      If your parents are in real trouble please call the bank and quote "financial hardship" and the bank will try and help you out.

      If you want more advice I would rather take it to email or phone.
      Best advice would be start sorting this out sooner rather than later.

      • Riczter on 22/10/2018 - 21:42

        At the time of getting the mortgage Dad had a decent FIFO gig, but it didn't last very long, i think around 2 years in total and then he was made redundant, but it worked out just enough for the bank to give them the mortgage.

        The build is finished, they decided to do their own landscaping/painting/flooring all to save money, the landscaping is half done, but there is a bit of a fencing/retaining wall dispute with the neighbouring land owner which they wanted to sort out first so they could get the fence in before doing the landscaping up to the fence, but that has dragged on with no resolution so its still not finished. Another saga. But the house itself is finished except for the front and side landscaping, one side fence, some paint touch ups and replacing some skirting boards.

        How much help is a bank going to be able to give if they quote financial hardship? Banks dont exactly strike me as beacons of generousity.

        Its frustrating because the bank wont give them a solid answer on what options they will have come Februaury - they have been to the bank twice in past couple months to ask about it. If they knew for sure then they could take more decisive action and put the house on the market ASAP to try and have it sold by February, coz you are right, if it drags out they are going to struggle. The current action they are taking is getting the house ready for market so its ready to go in February when the bank tells them what their options are. And in the mean time getting as much info as they can regarding what other options they can take and what their best course of action is.

        I appreciate your response with this, if you think you have more personal advice to offer I'll PM you my email address, but no pressure… this subject is probably a bit heavier than what you had in mind for your AMA, so I appreciate it :)

        • mortgagebroker on 22/10/2018 - 21:51
          +10

          If the house can only sell for 330k and they have a mortgage of 450k Westpac may be more likely to help if they believe they will lose 100k+ if it all goes to bad.

          I'll contact you offline.

        • nikey2k27 on 23/10/2018 - 06:37

          financial hardship I personally ask for the interest-only period 2 years bank don't want the house to ask rate to stay the time. have open chat with i feel WA market will pick give time. What the repo rate in your area? I Live in Townsville North Queensland house fallen by over $150,000 deal stuff day in day out. I own and live in all most repo house of Sydney investor

        • farknos on 23/10/2018 - 14:50
          +1

          I am not in the industry but for what its worth, if the house is worth 330k to 420k today, its likley it wont be worth that in feb 2019, your parents are in a large group of bank customers that will not be able to service there loan once they get to the new offer from their bank.
          good luck with it, great to see you having a crack on your parents behalf.

        • sagrules on 06/11/2018 - 14:02

          I think its great that you are trying to help your parents out. Just wondering how old you are and whether you have a job which could help them financially/loan them some money temporarily? Or other extended family which could do in the short term?

          • Riczter on 06/11/2018 - 14:53

            @sagrules: 28, 40-50k/year with several casual jobs with good future prospects, 10k saved. Would love to be able to buy the house off them as an investment but not quite there yet financially, need full time salary, which i wont have for another 2-4 years. Happy to loan them my 10k but not if its going to be squandered, their fiscal sense doesn't have a good track record.
            No other extended family in a better financial position :(

    • Pantagonist on 23/10/2018 - 01:17
      +15

      Honestly, this should be a thread unto itself.

      How to help a FIFO-but-not-really-because-redundancy / Bunnings FTE over-extending on a mortgage is guaranteed front-page material.

    • orangetrain on 23/10/2018 - 08:31
      +6

      You sound wise and mature for your age. Kudos.

      • HighAndDry on 23/10/2018 - 09:57
        +7

        Better than their parents that's for sure.

    • ribze1 on 23/10/2018 - 21:20
      +1

      Sounds like a really bad scenario and it's really unfortunate.

      The banks have been hammered for lapse lending standards in years gone by, even if your dad was earning six figures at the time i still think the bank was mad to lend to someone who was 59 at the time (and mum 50 but a low income earner). How does your dad only have $50k in Super? Assuming standard $100k+ FIFO job for 2 years would need $18k in compulsory super alone. Super's been around for 25 years.

      Interest only should be banned IMO as it only works if prices go up and people are using the property for investment purposes (add in NG too). Or it's for Owner Occupier's who are stretching so far it's the only way to get the loan size they want.

      Alot of people are going to get burnt with rising rates and the 5 year max periods on IO loans ending, and they also need to take responsibility for the decision.

      • Riczter on 23/10/2018 - 23:16
        +1

        He's worked for himself his entire life with a reasonably successful painting business, but, working for himself, super was always low on his list of priorities after mortgage, tax, bills, kids education, etc. He got most of his super from the FIFO job. But hes struggled to keep up the same client numbers after getting back into it after losing the FIFO job. But you're right, IO loans don't make a lot of sense in a volatile housing market

        • danyool on 24/10/2018 - 23:16
          +2

          Your parents house is part of Perth? A few rumblings in newspaper reports/magazines/property forum I've heard is that the market there is just starting to turn around. I don't know specifics, and you don't know how far away it is, and it would be a shame if they had to sell before an uptick, but got to be realistic and do what you can.

          Are you living in the house too? Option 3 - move out and rent is probably a good move, although spending big $ on landscaping will eat into their cash.

          If they stayed - or even if they move to other rental, instead of Airbnb, ( as you're mum is worried about the 13 year old) - they might consider hosting a student as Homestay. You get about $300 per week. You've got to provide them meals, but reckon it would be net positive. Get 2! ;) (Probably can't use it in loan calcs, but could help with cashflow)

          Don't know about this company - but heard an ad on radio a while ago for similar. This is just first Google result for Perth: https://www.homestaynetwork.org/perth-pricing/

          Back on Airbnb - Cash rewards have a signup bonus of $150 (maybe US$150?) for new rooms. You only get paid after they are rented, but they could just do it once - get the 13 year old to sleep over at a friend's, or everyone go out camping for the weekend or something.

          Finally - Uber. If you're dad has a suitable car, could be possible way for a bit of extra pocket money. Yes, it's not huge dollars, but if he's not got much work on anyhow, it will be something else to do. It usually isnt included in loan servicing, but extra cashflow. Just note as rideshare driver you HAVE to register for GST, so if he isn't already for his other business he would have to by default now (as you just work under one ABN) so might not be worth it.

          All the best

        • ribze1 on 25/10/2018 - 22:18

          Sorry if i sounded like a d*ick by the way, no malice intended.

          My father in-law is a taxi driver (therefore self-employed) so i get it and i say the same thing to him about not putting money in his Super - now 52 and has SFA.

    • PAPower on 27/10/2018 - 17:31
      +1

      Have you looked at sublet part of the house to get some extra income & also have some costs (including interests) tax deducted?
      I think it's best to sacrifice your own comfort to get ahead in this situation. Location wise, Beeliar isn't bad from Notre Dame Uni, Murdoch Uni etc. and can attract some students?
      Also look at becoming a homestay for international students (from above mentioned uni) to turbocharge your rental income (homestay international students often pay higher than locals).

  • p1 ama on 22/10/2018 - 20:50
    +1

    I'm a mortgage broker, have been in the mortgage industry since 2012.

    Can you actually get lower rates than someone who is generally well educated in the area, knows the market, and is willing to put in the work to shop around?

    • mortgagebroker on 22/10/2018 - 21:29
      +2

      I would say yes but not by much. There are lenders that are only available through brokers so you exclude yourself from those lenders straight away. You selecting the wrong product could also cost you thousands.

      If I quit mortgage broking I would still go through a mortgage broker.

      Pretty much most accountants and financial planners don't have much of an idea on what's going on as they don't have product knowledge or up to date knowledge.
      Same case with people looking up things online.

      Most mortgage brokers are free, why not use one.

      If you are a vanilla client <80% LVR PAYG, the "bank special" I give you will most likely be the same you can get online. The difference is you are helping a small business instead of increasing the banks' profits for the exact same product.

      • petitejam on 23/10/2018 - 13:16

        What do you mean by mortgage brokers are free? I have family who are looking to buy a house and all they've done is gone to the bank to ask if its even possible (and one of them commbank said yes). I would prefer they ask someone like a mortgage broker instead but I have no idea how to go about getting one aside from googling and then it'd just be picking the one with the best looking website?

        What are the normal ways of finding a mortgage broker? And what does a mortgage broker actually do in terms of facilitating loans?

        • mortgagebroker on 23/10/2018 - 14:20
          +1

          Ask friends and family, your accountant or financial planner. Otherwise google.

          They will research the market, compare rates and negotiate the loan on your behalf, helping you secure the best loan to suit your specific requirements. Hold your hand through to settlement.

          People don't realise how much damage they can do by being put in the wrong loan; or how much money it has cost them.

          • p1 ama on 24/10/2018 - 03:00

            @mortgagebroker: From your responses, you seem like a great guy, but I don't think what you're saying here would be true of all mortgage brokers.

            Mortgage brokers have to feed themselves, so if you're not paying for them as a client, then somebody else is. If a mortgage broker is acting on commission from a lender, then don't you think it's possible for them to be simply salesmen for those products?

            If you pay a mortgage broker, it's clear they're acting for you, but with these "free" services, it's not that simple.

            It's happened before with financial planners who were "free", but really were working on commission and would sell clients products that weren't right for them just so they could make their cut.

            • MarsTitan on 24/10/2018 - 05:14
              +1

              @p1 ama: In this scenario, I would do research and still go through a mortgage broker which gives me the best rate and I am happy with. For the simple reason that at least Bank will have to share my money with another person (MB).

            • mortgagebroker on 24/10/2018 - 17:10
              +1

              @p1 ama: There will always be the dodgy ones in every industry.

              If you want to pay me for my services go ahead, won't change my recommendation :)

  • boomramada on 22/10/2018 - 20:51

    Do you get any chance to negotiate behalf of your client? or do you think client has a better chance of negotiating with the bank directly?
    For example, via broker, bank offer me x.20% then, when I went to close some of the account, bank offer x.15%, I felt like broker hasn't negotiate well.

    • mortgagebroker on 22/10/2018 - 21:40
      +3

      Yes, brokers do negotiate on your behalf. Sometimes it's better to both contact the bank. Obviously talk to your broker about all this.

      Banks will do more if they think they will lose a client hence why you might have got a better rate.
      I think you should call your bank every 12-24 months and ask the question if they can do a better rate.

      • knk on 24/10/2018 - 13:21
        +1

        I can confirm banks will do quite a bit if they're going to lose a client.

        I was getting shafted on the rate for my investment property and a stern phone call dropped the rate 0.8%

        • sagrules on 06/11/2018 - 14:04

          What did you say to them? Have been thinking to do this a few times now, but don't know which section of bank to speak to and how to best threaten to leave?

          • knk on 06/11/2018 - 14:23

            @sagrules: There's a whole team dedicated to retention, just call the main line and say you're unhappy with your current rate.

            I told them I had another offer from Bankwest, which was true. The kicker is I'm not sure the loan would have been approved / gone through. I think I told them the rate was slightly lower than it actually was.

            Initially she had a certain amount she was allowed to drop the loan over the phone, but it wasn't by much. It had to be escalated and they called me back in 2 business days with an offer that I was happy with. It wasn't quite as low as what Bankwest were offering but it saved me the hassle of moving banks.

            • sagrules on 06/11/2018 - 14:25

              @knk: Do they run any checks on your current loan and capacity to pay? Or just happy to drop the rate over the phone?
              Recently received a rate rise, so I'm wondering if they would still offer a discount?
              Also, do you have alot left to repay?

              • knk on 06/11/2018 - 14:30

                @sagrules: I've been with Bank of Melbourne for 6 or 7 years across 2 properties and never missed a payment. They'd have all the history they required I'd say.

                We were paying the loan without issue at the higher rate so I don't think that'd be a factor.

                It's more them not wanting to lose a customer.

                I think they have a standard rate per package and then can authorize a discount against that rate.

                https://www.bankofmelbourne.com.au/personal/home-loans/our-h…
                They've offered me a % off the owner occupier and investment rates for each line.
                The baseline rate can vary, but my discount will not.

                Just find another bank who offers a better rate, advise your bank you're going to switch and see if they can do anything. Just be nice / civil, tell them you're moving for a better price but if they can come close to the offer you've received you'd rather stay with them.

                • sagrules on 06/11/2018 - 14:33

                  @knk: Thanks for the advice, will give them a call and try my luck!

                  • knk on 06/11/2018 - 14:33

                    @sagrules: Got nothing to lose. Good luck!

  • Amaris on 22/10/2018 - 21:15
    +1

    What's the rate I could expect to get for interest only 80% LVR with an offset? Thanks

    • mortgagebroker on 22/10/2018 - 21:45

      Owner Occupied - Around 4.30-4.40, as low as 3.99
      Investment - Around 4.30-4.40

      Get advice.
      It may be better to purchase the investment property at 90% instead of 80% and paying down your Owner occupied property with the other 10%.

    • ely on 25/10/2018 - 20:50

      uBank's fixed rates are the same P&I as on IO - https://www.ubank.com.au/home-loans if you're considering fixed.

  • burtie on 22/10/2018 - 21:16

    Early in the year, we attempted to borrow through our bank to do a house extension but were told we’d have no chance so didn’t even bother with the application.
    We’re currently paying $1700 fortnight on a loan of $270K and looking to borrow an additional $260K or so. No other debts/credit cards, unimproved land value is $530 K, both have secure, permanent jobs (though I’m temporarily part time as we have a toddler)…I’m now pregnant with our second child though so I’m a bit worried this will negatively affect our chances (I wasn’t pregnant when we originally spoke to the bank).
    Do you think we’d have a chance of getting the loan through a decent broker or should I wait until after my maternity leave next year? My income should remain the same while I’m on mat leave.

    • mortgagebroker on 22/10/2018 - 21:56
      +4

      I would need more information.

      As long as your income is good enough I don't see a problem.
      Each child you have lowers your borrowing capacity, so you would have been in a better position prior to falling pregnant.

      If you would like to talk further let me know. Good idea to talk to someone now as if it is not the right time they can help you be "bank ready" once you go back to work.

    • Alexxx on 22/10/2018 - 23:30

      $1700 a fortnight for a loan of $270k is very high, I would recommend looking for another lender, my loan of $500k is only $1200 a fortnight.

      • pantsparty on 23/10/2018 - 09:24

        This is exactly what I thought when I read this - my loan and repayments are similar to yours. Maybe their loan term is much shorter than the standard 25/30 years in which case they could refinance to a longer loan?

      • burtie on 23/10/2018 - 14:15

        We have always paid well above our minimum repayments. That's why we were surprised when the bank knocked us back.

        • knk on 06/11/2018 - 14:25

          You can get knocked back for all sorts of reasonas.

          We got knocked back once due to having a lot of credit cards. Funny thing is the balance was literally zero on all of them.
          We just happen to compartmentalize everything, Credit card for me, the business, the wife, and a joint one. However all in all the credit limits ended up in excess of 100k lol.

    • ozbargaingal on 26/10/2018 - 14:16
      +2

      Hi burtie, I found everything changed when I was pregnant. Banks would actually turn away from me and only speak to my husband! The application was also only based on his salary alone. Pathetic. I felt like a second class citizen. We ended up going with an amazing broker who included a letter from my employer re:my return to work date. That worked a trick. All the best!

    • ozbargaingal on 26/10/2018 - 14:17

      Hi burtie, I found everything changed when I was pregnant. Banks would actually turn away from me and only speak to my husband! The application was also only based on his salary alone. Pathetic. I felt like a second class citizen. We ended up going with an amazing broker who included a letter from my employer re:my return to work date. That worked a trick. All the best!

  • uk3000 on 22/10/2018 - 22:18
    +1

    Speaking of loan with a redraw vs loan with offset account, could you please comment on this rumor (coming from a reputable source though): If you have extra money in your mortgage, get it out now?

  • Aust on 22/10/2018 - 22:23
    +1

    As an owner / occupier with around 25% equity in my home, how many zeros do I need in my bank account , ie saving to qualify for refinancing?

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