Just now I got this email from Athena…
You've been dropped!
At 2.30pm today, the RBA (Reserve Bank of Australia) announced a drop in the cash rate of 0.15%. We’ve decided to pass on the entire rate cut to you straight away.
Thats why I love them…
The more you pay down your loan, the more we’ll lower your rate. Automatically. It’s an Aussie first!
Pay down your loan sooner with:
ZERO Athena fees
Free Redraw
Automatic rate match
Drop your own rate
$250 credit each for referee and referrer.
Most of the offset providers charge $10 monthly fee..
that means $120 for year, lets say interest is 3% and if you got $4,000 average in your offset account year-around then saving is $120… so if interest rate is less than 3% (for 2.44% saving is $97.60) means much lesser than $120, also in your savings account got less-than $4,000 average means again it is less than $120.
Please consider this is just a example and depend on personal circumstances. My idea is offset is good, but not so good as we think with extra $120 yearly payment.
4k in offset in average? Mate you a joke Lol
@Kas: Because then if you ever turn it into an investment property you're going to have issues with tax deductibility. Plus you're also at their mercy if they decide to freeze or limit redraws
@netjock: This is completely incorrect, the name of the loan product has no impact on tax deductibility.
The key difference between redraw and offset, is an offset account is never considered a repayment towards the loan. When you take the money out of an offset if you ever rent the property, the loan amount remains the same.
If you were to take out 100K from a redraw the tax office will only allow you to claim the interest deductions on that 100K on your tax, if you use that 100K for income producing taxable activities. Where as an offset account has no such tax limitation, you could use the 100K for anything you like.
@OzzyBrak: LOL love how people vote me down because they need a detailed explanation.
It is both truth and perception of what you are doing to the ATO. Not just naming of the products. But there is nothing stopping you from redrawing before the property goes on the market for rental. Long as you are drawing it during the period when it is private use because ATO can't tell you what to do with your private money and if you are not asking for a deduction.
You got a point about putting it in the offset because you are going to use it for non income producing activities and you have correctly pointed out about using redraw for non income producing activities. But only when you are renting it out.
So the point is that you only get tax deduction for using money on income producing activities not buying a car and pretending you're going business.
Sticking a large amount in an offset account could have 2 problems:
1. Banking scams
2. Banking deposit guarantee is only $250k per banking licence, in a bank crash you'd get $250k back and the rest goes up in thin air. You might still owe the bank the full amount of your loan
@netjock: https://community.ato.gov.au/t5/Investment-property/Tax-Impl…
Point about govt guarantee is correct, though if you have a joint account it'll be 500k (250k each)
@netjock: Govt Guarantee does not cover redraw, so if bank crashes, all that money in redraw is considered paid/not your money. Your net position doesn't change but you lose access to it.
@SumoJuz: If the bank crashes you have to wait until the government reimburses you also. Don't think it is instant.
I am not against people suggesting there is a problem but I'm also against people suggesting there is a problem but nobody actually have solutions.
In theory to solve the whole problem you would have to spread your money across all the banks or keep moving it around based on some evaluation of risk.
Even if the government reimburses you $250k you still have to pay off your loan, it is just a matter of when the administrators contact you.
@netjock: …Ok you've convinced me. Having redraw is better. If the govt can't instantly pay me 250K, it is better to lose it altogether. /s
@SumoJuz: People can have a difference of opinion but see below:
Depositors bailing in the banks
Like Cyprus in theory you'd still owe the bank the full amount of your home loan and lose your money above the guarantee amount.
I have not see on any documentation or any website about how soon you would get your money back if the bank goes bust and they need to access the government deposit guarantee.
Knowing the government don't expect to get your full amount back for a few weeks.
Westpac no offset account rate is 2.19% before RBA cut the rate, if westpac pass the cut, then rate will be 2.04%. Don't forget westpac also provide 3000 cashback.
Even though it's only 2 years, it's still better than Athena, you can always move to Athena after stay with Westpac for 2 years..
How do you get Westpac 2.19% I thought their Flexi First was 2.29%?
@PeppaCat: Can you please share a link for evidence? I am currently refinancing with westpac and have plenty of equity on the property.
Why do people compare honeymoon rates against life of loan rates?
@Martyroz: Because honeymoon rates is not fixed loan, and you can always switch to another bank during two years.
People who need offset have 10 - 20 times that amount
@Nom: No need for seperate emergency funds, easy access to redeployable cash, more opportunity to split loans later on for investment / tax deduction purposes - plenty of reasons.
@Nom: my emergency funds, holiday funds and my monthly pay go in as well as any money I am moving between investments, I will normally always have between 50-100k in offset.
@Nom: because I put everything on a free credit card with points which then just debits to my offset each month. The other benefit beyond those listed above is if my credit card details are stolen it's their problem not mine (as opposed to a visa debit for eg which actually is my own cash)
@drprox: I do exactly the same, and so my bank balance is always pretty low - I keep enough in there to cover bills, and the rest goes into mortgage and investments.
Not sure how an offset is useful to do what you and I are doing ?
@pmx7: Here's the real answer, thanks 👌
So as Kas mentioned, an offset account is really worth the monthly fee for people without investment properties.
@Nom: Your logic was on point. If it weren't investment I definitely wouldn't bother with the annual package fee to get offset.
@Nom: It's not just the investment property scenario that is worthwhile. Transfers are not always instant from loan accounts to other accounts as they would be if transferring between your own bank accounts. There is often a delay depending on the financial institution.
You can also get situations like the ME Bank scenario earlier this year: https://www.news.com.au/finance/business/banking/me-bank-cha… they reversed it at least, but it's always a risk that it could happen elsewhere.
@Nom: Why would you put it in to offset 2.2% when the market index is paying like 2.8% dividends + franking credits.
@pmx7: If you set a direct debit of minimum repayment for investment loan from your PPOR redraw account. Problem solved. Redraw will become equal to offset in every other respect.
Then why do they need offset ?
I have a small business, and I keep all of the business money in the offset account, reducing my home loan interest. A day or two before the end of the financial year I transfer all the business money back into the business account. The tax office view this as a loan from the business to me, but the tax office says interest is only chargeable if the loan exists at the end of financial year.
If you're going to do this, check with your accountant first, it may be different for different business structures (sole trader, partnership, company).
Lol $4000 in an offset.
Think he missed a few zeros
@nightelves: No I didn't… my immediate liquidity power is $2k cash/bank and $11K credit card… all other money sitting in Athena.. and don't have investment property…
so for me… giving $10 for offset is loss…
@Kas: The investment property is what driving price crazy last time. The owners are not even live in Australia according to the news.
To make it worse they ‘gambling’ with the property, pay only the interest and expecting the price will go up in less than a year, then sell it again.
What a future of young Aussies will have trying to buy a million dollar house:(
@brongz: yknow theyve stopped that with new taxes etc.
if young ppl are willing in VIC they can easily buy a house out in like werribee or craigieburn? and maybe buy in south yarra when theyre a bit richer…
That's my monthly repayment 😂
Why have an offset at all with $4000? You'll get better rates with fixed.
Offset is useful when you have $100,000 in your account.
Lots of ppl like me have more than 80k in the offset account, eventually cutting the interest well below 2.19% net of offset fee.
The rate is not bad but definitely not a deal for prepared ozbarginer. So depends.
Most of the offset providers charge $10 monthly fee..
Almost all major banks waive it off when your loan is a part of the package, which costs around $400/ yr with most banks.
That's because the fee is built into the package cost. You're still not getting it for free.
most people has a lot more than 4K in offset, especially if you got properties investment stuff
I say 50K plus.
I agree with belesci. Most aren't going to stick with 4k in an offset. Maybe the first few months/year, but after that most who have offsets and are paying a fee should be using it e.g $10,20, 40,50k. So will mor ethan outweigh it. If you only have $4k at all times then why bother with an offset as you mentioned.
Other than no application fees, any reason athena over homestar if 60% LVR? 1.79 vs. 2.19
Discharge fee?
Application fee?
Looks like ~1700$ altogether
Actually I like Athena because of their Automatic rate match promise. Not like any other lender all existing customer can get / match new customers rate.
Except that's not actually a thing anymore, after they refused to honour the rate match to an interest drop about 6 months ago. These guys can no longer be trusted.
Tail between their legs after they repeatedly called out all the big banks over this behaviour, then did it themselves.
The OP is talking about matching new customers rate. Most banks try and screw existing customers over while offering better rates to new customers.
@bio: Yes but they also promised to pass on all cuts from RBA, specifically targeted other institutions for not doing it and made a big play of it on Social media and targeted advertising, then carried on the same way themselves. Their promises are worthless, as has been shown in the past…
@ozbd: Yes
Go on their Facebook pages to verify . 3rd March "bla bla bla we're the best and don't do what the big banks do, we always pass on rate cuts" ……….19th March "We're not passing on the rate cut"
@KRM123: Nowhere on those Facebook posts does it state they “always” pass on cuts in full.
They pretty clearly advised they were the only lender to pass on the previous 4 cuts in full at the date of the post.
They never advertised their product as a product that moved in line with the rba. Other lenders have tried to introduce those sorts of products in the past, but they’ve failed due to being substantially higher rates then normal variable loans.
@Extreme: For the record, they had passed on every rate cut since their inception to the market in Q2 2019, and heavily advertised that they were passing them on, so in actual fact they had "always" passed on rate cuts up until then. The RBA emergency rate cut came at a time when the economy needed a boost as Covid was kicking off, and the RBA did it to put money back in everyday people's pockets so that they would spend more. RBA wanted Joe public to benefit from this, not the banks/lenders, and heavily criticised any lenders who didn't pass it on. Athena pocketed it, and gave the middle finger to their customers. It was an un-Australian move.
Slightly embarrassing to make a song and dance about it in your advertising and call out the 12 big lenders, then 16 days later, do the exact same thing that you heavily advertised against not doing, no? "putting money back in Australian families pockets is what we are all about"
Judging by the comments from many other customers at the time I wasn't the only one who was upset about it.
Was it contractually written that they would pass on all rate cuts? No of course not. Is it contractually written that they will give new and old customers the same rate? No it's not, all I'm saying is that businesses change fast, so what works one minute may not work the next. Don't sign up on that promise if that's your sole reason, because their are lots of good rates on the market. You will get the best value on your mortgage when you look after your own interests and forget loyality.
Also Kas is affiliated with Athena, and should be clicking the button to say so.
@KRM123: They didn’t even advertise they would pass on all cuts.
If that’s what you believed, then that’s your own issue. They never advertised nor contracted that they would pass on all cuts in full.
They kept 1 rate cut, then later passed the majority of it on when they restructured their loans based on LVR percentage.
Someone paying <60% lvr received a 0.20% reduction off the rate they were paying in September I think it was.
As far as the March emergency meeting cut goes, you could count on one hand the amount of lenders who passed it on.
I’m an Athena customer. I’m happy with them to date. Not an ounce of rate creep. I’m paying the advertised rate. Can’t say the same for my previous lender where I was paying 0.4% above their advertised rate 18 months after settlement.
Athena are transparent in the fact they keep existing customers on the same rates as new customers. Which other lender does that?
@KRM123: I think you have promises mixed up - where Athena shines and what they actually promise is that the back-book will always get the new customer rate, in affect they only have one rate for each loan type/LVR band.
As far as I know they are the only lender in the country that does this and guarantees no rate creep.
It's probably unfair to get too hung up on them not passing on the occasional rate when their rate has always been extremely competitive (And to be fair for the most part they have passed on the rate cut on the day it's announced). I'd still rate this as the best product in the market if you don't need an offset account.
Shocker. Hold out for 1.50% fixed for 2 years.
Not everyone wants fixed rates.
When?
Sorry for the newbie question in advance, considering a refinance, what fees should i look for?
As i understand, i should consider the Discharge fee from my current lender and the different fees of the new application such as application fees, valuation, Legal Documentation fee etc.
Other than that, have i missed something?
With Athena,,, no application fee or monthly fee.. no valuation fee
not remember whether I paid legal documentation fee for Athena of my previous bank NAB.. I paid about $200 or $300 for some..
What’s the minimum income to get a home loan? Or perhaps you can give me insight on your situation (loan value, income, repayment).
I need to learn this before I jump myself into mortgage. TIA @Kas
Just follow this web, you can get idea about it.. you don't have to give your name or any personal identification..
https://www.athena.com.au/start
I am just doing a refinance to Athena from Beyond.
Athena has charged exactly zero of their own fees - a few hundred of government fees IIRC.
Beyond has charged about $350 discharge fee + $180 landgate fee
Thanks mate, the landgate fee is new to me, need to check if i have it as well, i was aware of the discharge fee but not this one.
besides a discharge fee on your current lender, does Athena charge a discharge fee?
I presume all PEXA, landgate and other govt fees/charges are passed on? Same for identification fees and their "legal fees" charge?
So most of the 'difference' in lenders would it be application fees, valuation fees, and say annual/monthly account fees or package fees?
I refinanced to Athena sometime back. No charges by Athena. Given below are the charges I needed to pay for the mob/lender that was robbing me earlier! Check with your lender about charges when you have the loan discharged.
Discharge Processing Fee $300
Documentation Fee $250
Mortgage Registration (Government Fee) $287
Mortgage registration (govt fee) is for the new lender right? Is the documentation fee also part of the discharge fee with your existing lender?
Does Athena have a discharge fee? I saw homestar charges $535… plus has valuation fees, legal fees, identity fee, and the usual PEXA /government charges on-charged… so trying to cover all bases when comparing alternatives.
Whenever you refinance you will have the Mortgage Registration Fee. It basically will move the previous lender from your title document and will place the new lender AFAIK.
The other two are by the previous lender. It is one or the other way of them robbing me some more.
If I move away from Athena, I will not be paying Athena any fees. But will still end up with the Mortgage Registration Fee (and any other fees the new lender will disclose)
Hi, I got a really silly question, if my house is worth $550k and I still have $260k to pay, but my original loan is $330k, when looking at the LVR, do I look at the money I owes now or the amount I started?
Should be owes now…
so it wont qualifies for the 2.19% if its 47%?
you are qualify for 2.19%
Claim the equity out of the house, if it is an investment property and then get higher loan
@Tiger: I think he means get a new loan for as high a value as possible (without having to pay a higher interest rate because you get into a higher LVR bracket). That will also increase your cashback from a broker if that broker gives back a percentage of the loan. Then put the excess money back into the loan's offset account, giving you a nice "cushion" if you are unable to make payments for a while, which is a risk for many in the current economic circumstances.
A worked example: market value is $550k, still owing $260k on the existing loan.
On this deal, the interest rate jumps up at 60% LVR, so make the refinancing loan be for 60% of the current market value. 60% of $550k is $330k, so make the refinancing loan be for $330k. $260k of that goes to the old bank to pay off the loan (plus a little bit for fees), leaving roughly $70k to put into the offset account.
That $70k is equivalent to many months of repayments, giving you a "cushion" to make the repayments if you get laid off. Or, if your employment is secure, you could look at using that $70k to make a deposit on another investment property.
What it currently is, 260/550: your lvr is 47%
Not sure why the negative. It’s 2.17% before the current rate drop and includes offset account.
Has Many lending awards over the years.
So a valid option I would of thought.
Sorry not answering but I need info since I’m new with this mortgage thingy.
With your 330k loan how much minimum income the lender want you to have and how much the monthly repayment? TIA
Check out the “borrowing power calculators” on some of the big banks websites
Just follow this web, you can get idea about it.. you don't have to give your name or any personal identification..
https://www.athena.com.au/start
Income is not exact measure. Banks check serviceability mate.
Hypothetically, someone with 5k per month income and 2k expense weighs higher than someone with 6k income and 3k expenses - considering it all fixed expenses.
The new lender will pay the old lender the outstanding balance (in your case $260,000), and this will be the value of your new loan.
Divide that by the value of your house ($550,000), will give you your LVR (in your case, ~47%)
My understanding is your original home "value" when you did your original loan is irrelevant. They will do a 'valuation' and form there that's when they see what 80% is. So if you want an 80% LVR product your loan can't be more than 80% of that valuation.
Hence the issue with refinancing is (for me at least) i know my original loan value and that i am down to 80%, but have no idea if the valuation will set me back another 10-20% if the property price is deemed 'lower' now…
They calculate it based on a conservative guess of your current house/property value.
So if your local market goes up, your LVR would improve / go down (50% is better than 80%)
Edit: Missed the thread, oh well
Any idea how the valuation process goes?
if you were asking to refinance say 200k do they actually want to get an expert valuation if you are in metro melbourne and there is no way you would get a house for under 800k in the area?
Would rather not have to finish some of the bits I have been working on to get someone in to inspect if i don't need to.
I doubt they would actually send someone. I’ve never seen anyone
they are really stingy and very hard to get application approve with them
I found a similar experience with UBank.
They have fantastic rates, and I was willing to put up with the "online-only" service. But unfortunately, they have really tough lending criteria.
So I stuck with the big 4 lenders. They have pretty good rates these days.
No cashback = No deal, $250 reference credit is pittance..waste of time IMHO
No offset account…
Rate still higher than westpac..(2.19 in the past)