This deal is basically 0.5% discount over their basic variable rate loan product for 3 years. I haven't used this bank before so no idea of the reputation.
Eligibility listed on website are:
There is no fees for application, redraw, establishment nor monthly fee.
How about making additional payments and redraw as required?
It is really a different concept although people seems to always mix the two together.
In real life operation offset is way more convenient as the money is there available for you to withdraw straight away.
Not just about convenience. It is about when your pay packet comes in, it immediately begins working for you as long as you set your pay to come into the off-set account. Far better long-term, however I will say short term this deal's rate is great. I can't imagine many mortgages with offset accounts coming below 6% these days.
@Tuttorix: But the problem is you're getting charged for that offset account by the banks having a higher rate for that loan.
@danzig440: Hence the short-term this deal's rate is great. Long-term an offset account will work far better for you.
@Tuttorix: TicToc (now Timely) is under 6% and has offset and is almost standard across industry now to charge $10.
The catch of putting all your salary in to offset is your other half has full visibility of your spending, not exactly a good thing.
@ozborgain: you can keep the money in the offset account for ~ 40 days before you have to pay your CC
@syswong: I'd be more concerned about the future of the relationship & losing half of your assets if there's a drama that your missus sees what you spend money on.
@syswong: I want to upvote your TicToc advice, but I want to downvote your relationship/honesty/finance advice. I closed my eyes to let fate decide. Sadly, I missed both buttons.
@MattyD: Always safe than sorry, you have no idea how many people regard sharing their finance, Google / Apple ID etc….
An old say the higher you expectation the bigger your disappointment…..
@syswong: Not true of all banks. Quite a few banks allow multiple 100% off-set accounts to be set up under individual names to be used like normal cheque accounts.
I always advise to have an offset account.
My understanding is:
• Offset = "your money"
- you can take the money out, whenever you like
- if bank collapses, you won't get this money back as it's not covered under the government guarantee
• Redraw = "bank's money"
- every time you take money out, it counts like a 'mini loan' from the bank
- if bank collapses, the government guarantee 'protects' your money, and after satisfying the creditors, you should get your money
@whyisave: Only reason I ever want to switch from offset to redraw is if I become unemployed and need to apply for cenno; redraw isn't assessed as income and assets while offset is coz it's liquid. Other then that, offset with linked credit card package all the way (I'm using the Westpac offset loan @ 6.04% using the "All-in-one" $395 annual package fee which comes with a fee free credit card).
redraw isn't assessed as income and assets while offset is coz it's liquid
That's a very good point.
I wonder if this applies to senior citizens, who cannot receive the pension, due to 'assets test',
but what if they don't have any assets and money is in redraw?
That's got me thinking !
@whyisave: Basically, your own home (that is Only used as a primary place of residence and nothing else; can't run a business from it etc) is the only thing you can keep without the govt constantly trying to poke you about
To avoid that and enact a half assed retirement:
Xfer all your savings to your redraw and keep the max amount of non-PPOR assets in stocks that keep you below the pension income threshold (companies with fully franked dividends are a big help).
Enjoy your untouched aged pension, partial dividends, cash/bill assistance from family/friends who live with you
@donman92: Won't stocks be counted in an assets test ?
Also, wouldn't their dividends will be counted as income (and then declare them every tax year) ?
PS:
I couldn't send you a PM, to thank you, but if you want, you can write to me.
@whyisave: Yes, but you can have a certain amount of stocks. Which also makes me go back to the drawing board; you're meant to get a pension from your superannuation which then pays fully franked dividends to avoid paying any taxes.
@donman92: I just know old folks that didn't have superannuation, because they didn't have a working life in AU.
But the assets test disqualifies them from the pension as well, even when they're unemployed and already over 65.
So, you gave some compelling ideas, which has piqued my curiousity,…I mean, it will help me chart my life forward (more than 2 decades later!), but if I didn't set it up now, I don't know how my current super balance will look after me, because it just didn't grow as much.
(That's why, 1 year ago, I started contribution 10% more through salary. I wish I knew about this, in my younger days too )
@whyisave: I believe it is still covered by government guarantee of $250,000 per person per bank. But of course a lot of people's mortgages would be a lot more than $250k.
From what I can see/heard/applied for - big 4 with offset don't even come close to this. The cheapest would be Westpac or ANZ I believe. However, there are smaller tier 2 that will easily give you a sub-6% rate with offset. Look at sister banks of the big 4 - Bankwest/Ubank/st george, etc.
@Freak00718: I haven't seen sub 6% with off-set, any chance you have any information on this. I would love to learn more.
@Tuttorix: Very much depends on individual loan circumstances of course but I think this is something that a mortgage broker should be able to get you as they are able to get additional discounts than what is advertised on the bank websites or through going to a bank directly
@Tuttorix: I know of multiple people with 5.99% OO offset loans at st. George and Ubank. Newcastle permanent at 5.89%. there's plenty out there, need a good mortgage broker to get you these
@Freak00718: Seems there was a small period of time when brokers could get sub 6% with WBC, STG with an offset (< 70% LVR).
It is really a different concept
But is it?
In real life operation offset is way more convenient as the money is there available for you to withdraw straight away.
That's is exactly how redraw works.
I have both Offset and Redraw, and whether I take money from offset or redraw the process is exactly the same.
Actually with st george this is not true. There is a way to redraw straight away.
Redraw or offset didn’t bother me when I had a loan for a PPOR.
If you ever rent out that PPOR or have an investment property loan, you will wish you have an offset over a redraw facility.
Could you refinance to 80% LVR if you've previously redrawn?
@JimB: True but couldn't you request to draw down additional funds with the new lender? Not sure if those additional funds are eligible for interest tax deduction, however.
@DrPotato: additional funds could be tax deductible depending on the use of the redraw.
However its not a good idea to mix and match deductible and non deductible loans
makes the world of a difference if you need to claim a tax deduction on the interest in the future
Any chance you could explain that for me?
@Polt: If you draw money out of redraw and your interest goes up as a result, you cannot deduct any of the interest above what you would have paid if the money was left in the redraw.
There is no such issue with withdrawals from an offset account
If I understand correctly, the tax rule about the redraw applies to withdrawals from before it was used as an IP (presumably to prevent someone from maxing out the redraw right before putting the property on the rental market).
I wonder if big 4 will match this rate?
afraid not possible
I dont get it - this is a not a fixed rate product and yet they are advertising it as a "3 Year Discounted Basic Variable Rate"?
Yeah, a bit confusing. Their rate wasn't going to be the same for 3 years anyway so why to mention this. Or it may mean that they won't change the rate (reduce or increase) for 3 years even if RBA rate changes etc. If that's the case, then it's a no go.
It sounds like it's discounted beyond their "normal" rate for 3 years. Kind of like the first 5 recharges are 10% off you prepaid mobile plan.
It's not this rate is "unchanged for 3 years", it's the 0.5% discount against the basic homeloan product rate "remains unchanged for 3years".
E.g. their basic rate is 6.19%, and after 0.5% discount the new rate is 5.69%.
If RBA drops 0.25% and AMB drops 0.25% to their basic rate, you will get 5.45%.
If AMB doesn't follow RBA rate drop, you have the same 5.69%. By that time you could choose to refinance to another bank if others rates are better to you. Since it's variable rate there is no penalty if you leave them.
There's no "penalty" for leaving but there is a government cost in the form of mortgage discharge and registration plus any establishment costs of the new lender. Minimum of $500+ to refinance.
@icarus255: You are correct. That is why the new lenders tend to use cashback covering costs to motivate you from refinance to them.
Anyway, this deal's feature is "low rate", and maybe other deals feature is "cashback", just different aspects.
@kcome: Without a doubt this is a great rate, probably the best in the market right now for an 80% LVR. Even the comparison rate is pretty good. How this rate stacks up with the other lenders in 12 months time who knows? Like you said it probably won't matter to most people because they will just refinance out if AMB jack their rates.
All I'm saying is there will always be a cost to refinance and even worse there is a risk that you can't refinance out at all because your financial circumstances changed or because property prices have dropped and you no longer have the equity to complete the refinance.
Refinancing a home loan isn't like switching a credit card - there is a lot more at stake and a lot more risk involved so make your decisions carefully. My best advice is speak to a good broker or a financial professional first.
The discount applies for 3 years is what they are saying i'd imagine. The discount percentage remains the same whilst it is applied against the cash rate of the RBA (which fluctuates of course).
no one in the industry even heard of this bank lol
There's plenty of smaller banks around these days; what's your point?
I'm just stating the the fact, why so sensitive. Yes there are lots of smaller banks, but they are known (for example in lenders panel within most aggregators)
Not sensitive, just wondering what your point is - are you suggesting to stay away? What is 'the industry' in this case (RE? mortgage broking?) Their website says they've been around for over 70 years (through a few amalgamations and re-names) - a few of the banks I've been with have gone through the same when becoming a bank became a better option than being a credit union.
@askvictor: I’m assuming his a mortgage broker.. I remember going to my mortgage broker 12 months after settlement saying I will move to UP bank at 5.95% but before I do I will give you the opportunity to either better/match it with another bank. Obviously he couldn’t but gosh the fear he tried instilling about going with a smaller bank and all the risk and they are not a known bank and so on. I’m just glad he lost out of all his commission after doing all the work as BOQ clawed back most of it.
@Iwantthebestprice: Yeah, I don't quite get the fearmongering about smaller banks when you're talking about loans. What's going to happen if the bank goes under? Another bank will buy that debt and you'll keep repaying it. It's not like you'll lose any money or anything (unless I've misunderstood something). And for savings, even small banks are guaranteed by the govt up to $250,000.
@Iwantthebestprice: 'I’m just glad he lost out of all his commission after doing all the work as BOQ clawed back most of it'?
That's a pretty negative mindset to want the broker to lose income
@JimB: After trying to scare me going to a bank which he prefers so he does not lose money but I pay more, please, no sympathy from me.
Imagine feeling bad for someone who tried to make money of you by fear. Sad really…
@askvictor: nah I'm not suggesting to stay away. Looking back at my original comment, it is admittedly with a bit improper teasing tone. Yeh I'm a finance broker but this bank doesn't even exist in wikibroker (a credit policy wiki for mortgage brokers). But at the end of the day its actually good to have some competition.
Im with Easystreet for my loan and honestly dont understand a lot of these other banks. 6.04 rate, free offset. Only annoying thing is once off $500 app fee which was super non negotiable.
Very tempting; even the standard rate (5.89%) after the 3 years is less than most lenders. Would be good to know what the discharge fees are in case of wanting to change lenders from there
edit: this reverts to a Basic Variable Owner Occupied at 6.19% after 3 years; there is also the GumLeaf Basic Variable Rate Owner Occupied at 5.89% but that is only for new home loans. So might worth going to the gumleaf basic from the start.
Because the rate increases to 6%+ after 3 years… look into it first before you neg
Bad neg when you don't even understand
Do you have options of multiple offset accounts linked to loan?
For those interested in signing up, please be aware of the tax implications of an Offset vs Redraw Account.
Offset: ~$200 - 600 account keeping fees annually; Nil tax implications.
Redraw: Nil account keeping fees; If you redraw funds for personal use, the withdrawn portion is deducted from the total tax deductible portion of the loan and is treated as a new, non tax-deductible loan.
tax deductible
only apply to investment properties, this offer is for owner occupied
A loan can be OO, should you have flatmates however, a portion of the costs are tax deductible.
Good deal but the minimum loan amount is too high. It should be $250k.
I had applied to refinance my loan with them previously. They were very promptly with processing my application and followed up politely. However, they couldn't lend as much money to me as the Big 4.
If you have already reached or exceeded (because you got your loan when the rate was low) your borrowing capacity, my suggestion is just don't bother to apply as you will very likely not be approved.
I went to refinance with them a couple of months ago, was happy with numbers etc, but when I went to submit all documents (payslips, bank statements etc), they did not have a secure server to send/receive through. Just email.
At least they don't get you to log into your bank through their site which is nice to know.
By new borrowing only do they mean you can't refinance to this deal?
They say "new borrowing" includes refinance from another bank. Not including "refinance within the bank itself".
So this is only for getting a new owner occupier home loan with them - not being able to refinance? The term is quite confusing ngl.
If there are no fees, why the comparison rate different than interest rate, should they not be the same in this case?
The higher comparison rate is caused by “after first 3years the rate goes up to 6.19%” (by today’s variable rate). It’s not caused by fees.
@Iwantthatbargain please check the response above :)
Thank you so much for the clarification
I refinanced with these guys a few months ago, decent experience but they're very old fashioned with paper documents, sending them files over email was tricky. Not their fault but the signed documents got lost in the post as well, so it took forever to finalize.
I'd recommend them for a refinance, but not for a purchase unless the settlement is 60+ days.
This compared to Hume Bank, 5.64% <60% LVR (0.35% off for 2 years). Thoughts on which is better? I'm thinking Hume, refinance after 2 years
I’ve seen this post. I’m not in their designated postcode. And I am not sure why this broker has exemption. Also 60% LVR is a little edgy.
Website is broken error. Edit…Okay it works on desktop.
I am with them currently, on a similar offer I got earlier. Small bank, decent customer service, old fashioned way of handling docs, take their time, they didn't act up in quickly trying to approve as some of the big4 and their digital offerings tried to do which I liked as they will approve you cautiously which might save you financial stress in future.
Btw they are a NSW bank and I am out of state and handled my case myself, no broker.
Got a call today from this mob. Quick turnaround time. Pleasent call. Much better than st george which can't answer all my questions and seems to not want me to continue as their customer.
There is no fees for application, redraw, establishment nor monthly fee.
Pardon my ignorance in financial matters, just wondering, If there are no fee, why comparison rate is higher than the published rate?
Seems decent, no offset is a killer though