First Home Buyer - Mortgage Options?

ggmm2013123 on 03/02/2018 - 17:52
Last edited 03/02/2018 - 18:29

Hi Guys,

I am in the market for the first home. Looking for an apartment and feel comfortable that we have about 20% deposit. (we are buying in Western Sydney)

I have been following ozbargain and know Ubank, ING, RAMS, Macquarie, BOQ, loans.com.au are generally good options. The reason for asking this questions that I have heard that brokers can only provide limited options.

Now should I go to mortgage broker or just go one of the above directly and ask for pre-approval?

Is pre-approval needed if we already have 20% deposit?

Also, what should I consider in addition? - any advice will be helpful. Thanks.

Edit: Any recommendations re broker? Western Sydney area.

Edit 2: This looks good - https://www.loans.com.au/home-loans/offset-var-80

Financial

Comments

    • ggmm2013123 on 03/02/2018 - 18:11

      Thanks, I did a quick search but couldn't find answer specific to my situation.

  • smuggler on 03/02/2018 - 18:00
    +1

    Consider the taxes after your 20% deposit.

    https://www.ato.gov.au/general/property/your-home/buying-and…

    • ggmm2013123 on 03/02/2018 - 18:12

      I had a look and first home buyers in NSW are exempt from stamp duty. So no stamp duty payable.

      • smuggler on 03/02/2018 - 18:13

        Oh right you're buying in Sydney. Congratulations.

        • ggmm2013123 on 03/02/2018 - 18:18

          Thanks, did calculations and we may pay just about what we pay in rent currently, for similar two bedroom apartment.
          Only difference will be suburb and I need to travel 10 more minutes in train.

        • ihbh on 03/02/2018 - 19:02
          +2

          @ggmm2013123: Have you taken strat cost, insurance etc into account that you would have pay as an owner?

        • ggmm2013123 on 03/02/2018 - 21:35

          @ihbh:

          thanks for the reminder, it would be about additional $150 to $160 per week so yes about $100 more on top of my rent amount.

      • jug123 on 03/02/2018 - 21:48

        FHG in NSW is zero stamp duty uo to $650k then it reduces up to $800k when it cuts out

  • [Deactivated] on 03/02/2018 - 18:03
    +1

    ask your broker.
    we don't know your situation.

    • ggmm2013123 on 03/02/2018 - 18:15

      That's exactly I am confused about…

      I know what I need:
      eg
      an offset account
      understand variable loan and fixed loan difference
      We both work and can borrow up to $1M - quick borrowing power calculation done at few different website
      Looking at property under $650,000

      So is it worth going to broker or go directly to bank?

      • [Deactivated] on 03/02/2018 - 18:57
        +3

        PayPal me all your money

        • ggmm2013123 on 03/02/2018 - 21:37
          +30

          yes, I tried but paypal is asking $1M service fee. Please transfer it to me asap to proceed further.

      • hazzad on 04/02/2018 - 10:04
        +1

        Offset would be useful to you if you know you have the ability to save and are happy to leave money in that account to offset interest incurred on loan. Any money in the offset is essentially seen as payment against the loan but not actually paid into the loan account. Monies can be drawn on with no fees or penalties. The option of an Offset will depend on who you go with and what loan package you sign up for.

        Difference between fixed and variable is that with Variable rates, the interest rate can move up and down at the will of the bank(be it reserve bank rate shifts or otherwise). Fixed rate is locked in for a period of time(1, 2, 3, etc years). Rate will not move up or down over that period. Only danger is locking in now and rates dropping. Plus fixed rates are typically a little higher to cover banks.

        Id consider smaller Credit Unions for a better deal on interest rates and fees. We are currently dealing with CUA who have good rates and very little in the way of fees with all the bells and whistles.

        Whether you go direct to bank or broker comes down to your comfort in reading all the details and dealing with issues that may arise. Id imagine a Broker will typically deal with al the back and forth for you. Dealing with bank, its up to you so maybe a little more hassle. But given you earning capacity, im doubting you will have any issues getting financing.

        As for your comment earlier, even with 20%, you still need pre-approval. You need to get your finances on place prior to purchase. Afterwards is just to much of a hassle.

  • airzone on 03/02/2018 - 18:13
    +4

    You could have a 50% deposit, and if you don't meet the serviceability guidelines, you will still be rejected (happened to a colleague).

    You could have a 20% deposit, and someone may have stolen your identity in the past and defaulted on a mobile phone bill in your name, trashing your credit rating, and now the banks won't touch you, and you'll lose your deposit when you default on the sale contract / pull out on the cooling period (happened to a colleague).

    Get a pre-approval.

    • ggmm2013123 on 03/02/2018 - 18:24

      Yep, have that idea and that's why I am asking here should we go to broker and stuck with limited options or search online and get best rate with required feature and apply there directly.

      FYI,

      I am not a true ozbargainer but feel generally comfortable
      eg.
      move my money to follow best interest rate
      have a city signature free fee card
      so I am confident that I may find good deal…just want to confirm here if I am going on the right track?

      Also, don't want to apply for pre-approval with many banks.

      • Ughhh on 03/02/2018 - 19:21
        +3

        broker and stuck with limited options or search online and get best rate with required feature and apply there directly.

        You don't have to go with what ever the broker tells you, you're not suck with anything. If you find some thing, show it to your broker and he/she can help explain everything you're asking us.

        • ggmm2013123 on 03/02/2018 - 20:58

          Thanks for your help.

      • hazzad on 04/02/2018 - 10:09

        Your best to do some research and narrow down to a few banks and then apply with one(maybe 2 if you arent confident you will get approval). Just be up front with each bank if need be. Whoever gets you a pre-approval first is who you need to sign up with. You arent subject to any costs until you sign a contract for the loan anyway. We had applications in with CUA and NAB at the same time. NAB took to long waiting for our title release on our current property, that they lost our business. never really wanted to use them anyway. They were just a backup as our lending capacity was tight on paper due to me being self employed. CUA came through with the goods us and have been great. But thats my story.

    • canleyheights on 05/02/2018 - 14:33

      This. Happened to my brother in law. Got defaulted on a mobile phone contract with Telstra due to identity theft. Took over 6 weeks to remove the bad credit rating.

  • Halo375 on 03/02/2018 - 18:27
    +1

    Get a broker - they are very helpful and will guide you through the process step by step.

    • ggmm2013123 on 03/02/2018 - 18:28

      Any recommendations?

      • Halo375 on 03/02/2018 - 18:33

        I found my broker on smartline.com.au. I’m in Melbourne so you’ll have to find someone close to you. They willcome to your house and sit with you for an hour, guiding you through all the offers available from all banks. They get paid commission by whichever supplier you choose.

      • 819mac on 05/02/2018 - 06:47
        +2

        I bought a house in Western Sydney about 6 months ago. After issues with my bank at the time (I am not goING to name who) I ended up being recommended Great Aussie Dream in Penrith and could not have been happier. I only had a 10% deposit though, so my experience is slightly different.

      • [Deactivated] on 05/02/2018 - 19:55

        try Naritas.com.au, their broker Ana is very friendly (and pretty).

        They're based in Mosman, but maybe able to service Western Syd.

    • megadeth on 03/02/2018 - 18:45
      +2

      I've ditched two big banks after being a loyal customer for several years, now with a small lender who provide at very low rate. I've never used a broker (not even a solicitor, just acted for myself). Mortgage brokers are just middlemen who find you whoever pays them the best (I may be negged a lot by these guys!). Remember you can't afford to switch lenders easily so choose wisely and stick for as long as possible, however, don't hesitate to churn away when they start ripping you off. MSExcel is your friend, keep researching throughout your loan term. For example presently, you should be on a lookout for a comparison rate of 3.6x-3.7x%. You'd find plenty of lenders who'd do this rate for you @LVR of 80%. Good Luck.

      • ggmm2013123 on 03/02/2018 - 20:56

        Thanks for the advice.

      • vinni9284 on 03/02/2018 - 22:20
        -3

        I'm not sure why you have been negged tbh.

        There are some brokers that are pretty good however you have to find them.

        Some just get their trailing commission and earn their passive income after the loan has been organised and you never hear from them again. Yes, the bank pays them this however I'd rather have the broker to "constantly" communicate/bat for me (that is annually check lenders for better deals) then sit on their commission and I have to call my current bank for a better deal.

        But I agree that you should be in the high 3 percentage rate and not in the 4. I guess it depends if the loan has an 100% offset which will raise the interest rate a little.

        Cheers

      • John Kimble on 03/02/2018 - 22:38
        +1

        Comparison rate is outdated.

  • John Kimble on 03/02/2018 - 18:52
    +1

    There's a couple of brokers active on this website, cape finance and naritas

  • ninjawarrior on 03/02/2018 - 19:25
    +2

    Go directly to a broker - they have negotiating power because of volume and will almost always be able to do better than your individually negotiated rates.

    Cape Finance helped me with my last refinance, and a new purchase around the same time.

    Would happily recommend them and they have a rep on here.

  • AncientWisdom on 04/02/2018 - 14:52

    I've had good experience with Unbiased Mortgage Brokers - unbiasedmortgagebrokers.com.au
    They easily offered the most competitive offer for my situation.

    If you know exactly what sort of mortgage you're after you could go with their sister company Flongle where you pay a set fee of around $400 to use their engine to get bids on the mortgage you're after, and if it doesn't beat another offer on the market you get your money back.

  • argonbay on 04/02/2018 - 15:49

    If you are buying a new home in NSW you may be eligible for First Home Owners Grant.
    Check NSW Govt Website:- https://www.nsw.gov.au/improving-nsw/projects-and-initiative…
    Get and Offset Account.
    Check on fees for establishment, ongoing and loan exit fees.
    Do your own research and find the best rates:-
    https://www.canstar.com.au/compare/first-home-buyer-home-loa…
    Lowest I saw was 3.54% from Homestar. State custodians next lowest at 3.64%.
    Go to a broker and go with them if they can get you a better deal.

    • ggmm2013123 on 04/02/2018 - 20:41

      Thanks for sharing link: I an after existing propererty or apartment ready to be purchased. As I have found I may not get new apartment within $600,000. So I have given up on first home owner's grant $10,000.

      However, I am still eligible for no stamp duty so that is still a benefit.

      Good idea re asking broker to match above rate.

      As few fellow ozbargainers have mentioned, I have contacted recommended broker.

      • argonbay on 04/02/2018 - 22:39
        +1

        Don't ask the broker to match the rate, ask him beat it.

        Good luck, I hope you get a great deal.

        • ggmm2013123 on 04/02/2018 - 22:47

          cheers. bigger headache is to find the right property and how long to keep searching before having the proper idea of the market.

  • MadgeH on 04/02/2018 - 22:39

    Hi OP

    As per the above answers from the community, there's a lot to consider.

    There are some lenders who offer special treatment to first home buyers (annual fee waiver, conveyancing rebate, first home buyer special rate etc.)

    Because of the current market conditions and competition, the best rate today may not be the best rate tomorrow but it's obviously ideal to keep the rate as low as possible without compromising on some handy loan features.

    I hope this helps

    Hass

    • ggmm2013123 on 04/02/2018 - 22:46

      Thanks Hass,

      valid points. Noted.

    • Sid13473134 on 05/02/2018 - 13:44
      +1

      Thats excellent advice!!!

  • yellowfever on 04/02/2018 - 23:39
    +1

    Get a broker
    They have better negotiation power when it comes to rates, and when you need things done with your selected bank and conveyencor the broker will make it happen. It's their job after all.
    You don't want to be doing brokerage work for your first property. You will miss something and end up having to deal with it yourself.
    But again look for a good broker.
    Since you appear to have an idea of which bank and loan option you may chose, getting a broker would help you understand the right selected loan you want.

  • snook on 05/02/2018 - 00:10
    -2

    A LOT of these cheaper loans won't have an offset facility because it means they lose money.

    In my experience, the broker will tell you anything and you don't find out the facts until afterwards.

    I had to set up offset after the fact and it wasn't done at the same time as it has nothing to do with the actual loan. So if you end up with a loan without it …

    • megadeth on 05/02/2018 - 19:55

      After seven years with offset account I rarely saved more than the $395 annual service fee. I ended up now with a redraw account (with unlimited redraws) with $0 fee and it's as good as an offset anyway. Moral: I never needed an offset account. Everyone needs to work out if they're saving or not in an offset account based on their lifestyle choices. Typically big banks charge you an annual fee plus 0.5-1% higher interest rate on average.

      • His_Holiness on 06/02/2018 - 01:45

        Redraw is not good at all if you have any thoughts about turning your PPOR into an investment property sometime down the track.

        • megadeth on 06/02/2018 - 08:02

          what do you mean? don't think my lender had any connstraints on this. Even if there is one, you can always redraw maximum amount and then put that money on the property you want before switching the PPOR into the investment property.

        • His_Holiness on 06/02/2018 - 10:04

          It has tax implications.

        • megadeth on 06/02/2018 - 21:46

          @His_Holiness:
          Think the only implication is deductibility of interest on the redrawn amount; which won't be any different regardless of any other source of funds (e.g., an offset account). The deductibility will basically be determined from the use of funds.

        • snook on 06/02/2018 - 21:59

          I had an offset account (that i saved in) on a loan, and i saved more than the loan and was paying cents for interest each month.

          So that made a saving of $8-900 a month.

        • snook on 06/02/2018 - 22:05
          +1

          @quasims: If your loan is 200k and you pay 50k into your loan and then redraw it, the ATO won't see that you have the 200k loan anymore. It will be 150k, even though it's back to 200 … so if you plan on negative gearing, depending how much you put in and then took out, it can affect that significantly.

          An offset account has nothing to do with the loan so it's irrelevant what money comes and goes from there as far as the ATO is concerned.

        • megadeth on 07/02/2018 - 18:59

          @snook:
          Will open an offset account with the lender and do redraw to it prior to changing my ppor to ip (if & when i need to).

  • myfuturej on 05/02/2018 - 00:36
    +1

    I agree, get a broker! Best decision we ever made in our life (so far). We only have 10% deposit but the process was very smooth, we basically just signed the documents prepared by the broker.

    I know we are deeply in debt (mortgage), but at least we have a comfortable home and we can drill holes, put AC, and modify our house to our heart’s content and make it safe for our little kids. We are paying a bit less than our previous rent, but maybe it’s because we live in a regional area, but our work is here anyway, so I do not see the point of living in the city.

    • codinghelloworld on 05/02/2018 - 09:45

      just curious, what is your type of job? I want to live in regional area too

      • AncientWisdom on 05/02/2018 - 12:49
        -1

        What do you do? Big regional centres have most kind of "normal" jobs available.

        • codinghelloworld on 05/02/2018 - 13:47

          Software engineer, :(, all of companies located in CBD

        • AncientWisdom on 09/02/2018 - 17:41

          @haisergeant: yeah I'm the same, it's tricky. All I can say is maybe start looking at tele commuting or working as a free lance. Drop me a PM if you wish to discuss further :-)

  • kpyam2000 on 05/02/2018 - 06:44

    HSBC seems to have the lowest rate = http://www.hsbc.com.au/1/2/homevalue?cid=AUH:pa:P0:MG:01:180…

  • steeevo on 05/02/2018 - 08:07

    My wife and I have been with Bankwest for the last 6 years and find them good. Once we have factored in things like offset account and rates, each time we have redone our mortgage (3 times now as we have traded houses a few times and blown a lot on stamp duty) we haven't been able to find anyone that could offer more. We always had more than 25% deposit which helped.

    Agree with others about going to a mortgage broker but take what they say with a grain of salt. For us, they said that the Bankwest loan was the best deal at the time but that since we only had one month till settlement (had pre-approval from another bank, but then decided to shop around), Bankwest wouldn't be able to deal finalise it in time so we should go with the second best option instead. That didn't sit well with us so we went into a local branch and told them that we wanted to go with them but that they apparently couldn't get act fast enough. Funnily enough they disagreed and were able to deliver.

  • Trying2SaveABuck on 05/02/2018 - 08:21

    I dont know you situation but i've been with both Bankwest and Ubank they are both good, Ubank is cheaper but they have some pretty strict lending criteria

  • ranap on 05/02/2018 - 08:29

    If you know what features you want & what fees you wish to avoid then Query couple of brokers to check who is giving you the best deal. Try out one of the cashback/rebate mortgage brokers, someone mentioned unbiased and flongle above. If they match the regular mortgage and then give you another 0.1% refund, that's cheaper.
    Fees to look for: annual package fees, conveyancing/disbursal fees, redraw fees, top up early payment penalties. Every one of this can be negotiated to zero.

  • markb28 on 05/02/2018 - 10:49
    +1

    I used Naritas and got good advice from them. They also paid me $1200 upon completion because of my choice of mortgage. Ours was a fairly standard joint mortgage with an offset account requirement.

    When looking at mortgages, look at flexibility to move mortgages, annual fees etc not just the lowest rate. Also if you need to move fast, make sure you ask about approval timelines as the banks with cheapest rates often struggle to keep up with demand (Bank of Sydney wasted a month of my time due to their backlog).

  • HungryTotoro on 05/02/2018 - 11:02

    Had a good XP with brokers in terms of getting a competitive rate with the features I needed i.e. offset account. They sat down with me to discuss my needs, listened to me situation (if say you wanted to sell/buy/upgrade or other goals) and also I also had at least 20% deposit like you. Most recently I refinanced with a different broker who I had a even better experience than the first time and I can give you the details if you want, just PM me. (reason was just my old lender wasn't competitive anymore in the present climate and there's good competition to be had/easy to refinance if you want to)

    I think brokers are the way to go since it is totally free service and at least in my experience the final choice is up to you which option to choose to go with. They are helpful for situations where we are time poor and want a consolidated method of comparing options.

    Once you narrow down some lender options then yes you can get a preapproval but the broker should also be able to get you a prelim assessment of you borrowing capacity and its just faster to have it once you lock in a lender you are happy with. Sounds like your situation is relatively safe in terms of your deposit to purchase budget but ofc depends on you're liabilities and serviceability.

  • MetaphorOZB on 05/02/2018 - 11:50

    From my experience, you definitely do not need a broker, however they do a lot of the groundwork for the pre-approval/finance process. Be aware that brokers can receive an upfront and ongoing commission on your loan, which while paid to the bank, you aren't going to receive the most competitive interest rate.

    IMO you will be able to get a better deal if you go to a non-broker loan provider, but you may spend more time dealing with the pre-approval/finance process (which isn't that time-consuming in my opinion). From experience, loans.com.au provides the cheapest rates available.

    Regardless of whether you have a 20% deposit or not, if you need any sort of finance you will need to get pre-approved.

    Having a 20% deposit means you should not have to pay LMI (insurance for the bank in case you default). This will save you money.

    I would suggest getting an offset account where your savings should be directed. This means that the amount you have in the offset account is applied against your loan (say you have a $600k loan and $50k in an offset - interest will be based on $550k). While your monthly repayments will stay the same, you will be paying more principal off which = big savings over the life of the loan.

    The last thing to consider is whether you fix all (or a portion) of your loan. This just means locking in the interest rate for a set amount of time. This all depends on what rates your bank offers - sometimes you can save money by fixing but sometimes not. This also depends on where official interest rates are headed (up is the consensus, but probably not by a great deal over the next few years).

    • Trying2SaveABuck on 05/02/2018 - 18:24

      I dont know what idiot down voted you everything you said is 100% correct brokers are the used car salesmen of the loan industry….

      • megadeth on 05/02/2018 - 19:12

        +1 just upvoted to compensate. I'm with loans.com.au since last year and a half and regretting why I remained stuck to big banks for first 7 years of my loan term. Smaller 'no-frills' non-bank lenders should be your first choice, unless you can't be bothered with the application process and can spare money to pay for facilitation. I'd rather be inclined to save it and put back in my principal.

  • spook290 on 05/02/2018 - 11:53

    My broker was useless, ended up finding my own home loan through ING and she did the paperwork, it was a long and frustrating experience (would ask for 1 document every couple of days instead of giving us a checklist)

    I recently read about brokers you pay upfront and they refund you the yearly commission they get, think they're called a cashback mortgage broker, might be worth investigating this further.

  • A1SEO on 05/02/2018 - 12:06
    +1

    You have a similar situation as me, 4 years back - first home buyer, buying in Western Sydney with 20% deposit and decent borrowing capacity as per the calculators. I went directly with loans.com.au since for my first property, went to ING for my second one, both of them directly.

    I have worked with couple of mortgage brokers in last few years and they have as such no advantage in a straightforward loan. However, they might make some paperwork easier.

    For your first loan, I would highly recommend to go directly, go for best interest rate with offset account. Especially, with 20% deposit every lender will approve you for the amount you are after. I can refer you to my lending manager at loans.com.au if you want, she has been really helpful and responsive both times. Experience with ING has been very good as well and their interest rate is very similar to loans.com.au too.

    Feel free to PM me, if you want to ask anything privately.

  • Madic74 on 05/02/2018 - 12:24

    Hey OP,

    I was in the same boat as you (<25 years, first home buyer)

    Except we only loaned $300,000 from the bank.

    After months of searching we decided on CUA variable (best rate).

    Loans.com.au seems good, but I was told by a couple of brokers that their customer service is sub-par and if things go wrong for whatever reason, they will throw you under the bus.

    Don't forget to conduct a building & pest inspection on the property you are looking at, saved myself and my wife a fortune.

  • aussie bargain on 05/02/2018 - 12:51

    If it was an owner ooccupier, you might be better off to get a loan with redraws rather than offset.
    This is from loans.com.au
    https://www.loans.com.au/home-loans/essentials

    I think hsbc is also running a special at the moment:
    http://www.hsbc.com.au/1/2/homevalue

    Get pre-approval for sure… you never know what is going to happen.
    If you are getting a broker, I would probably suggest someone who can give you cashback (e.g. matesrates).

    • ggmm2013123 on 05/02/2018 - 19:45

      why redraw is better compare to offset? Just in case if I want to buy another property in few years then wouldn't offset come handy? As well as paying bill, depositing pay and paying credit card from an offset would be little better imo. Please correct me if I am wrong. Thanks.

      • aussie bargain on 12/02/2018 - 13:14
        +1

        In general, most lenders would charge a higher interest rate for offset accounts (compared to redraw).
        Hence, if you are owner occupier, there is no difference in how offset and redraw works.
        That being the case, a redraw facility is better (as it will cost you less with the lower interest and you can't really do anything with tax anyway).

        If you can get the same rate and have the choice of offset and redraw, then certainly go for offset.
        However, this is not normally the case.

        • ggmm2013123 on 18/02/2018 - 18:51

          What's your take on full fixed 2 years loan with 100% offset account?

        • aussie bargain on 19/02/2018 - 11:34

          @ggmm2013123:
          Don't get too hung up on the offset.
          My experience is that most banks offer redraw (and as i mentioned, they work the same way if you are an owner occupier).

          Consideration for fixed rates are:
          - Actual fixed rate
          - Rate after the fixed period is finished
          - Your guess on whether rate is going to go up or down (currently most people would think that the only way is up, but probably not anytime soon )
          - If any additional repayment is allowed (and what is the maximum limit)

  • darkchoc on 05/02/2018 - 18:58

    http://www.infochoice.com.au/m/home-loans/interest-rates/

    Many providers with decent interest rates.

    Worth educating yourself before skating to a broker.

  • ggmm2013123 on 05/02/2018 - 19:42

    Hi Guys, Thanks all for your suggestions and help. I have contacted one of the broker recommended above. As it was suggested here, there is no harm contacting them and asking to match/beat best available out there. Regardless of that, I have now idea what I am heading towards and comfortably can approach lander directly for an approval.

  • Thenarrator on 05/02/2018 - 21:05

    mate there are heaps of questions. is this investment or owner occupied property. Is this interest only or pni. is this investment loan or owner occupied loan. note being an investment property does not automatically mean its an investment loan. Being an oc property may not mean its an oc loan.

  • WTF on 06/02/2018 - 03:21
    +2

    Here is what i learnt from buying property.

    1. Pre-approval gives you some confidence about your buying power but otherwise it is useless. It is NOT a formal aproval. You will have to go through a formal approval by a lender irrespective of the pre-approval.

    2. Avoid buying a property at the maximum of your borrowong capacity. Thats asking for trouble if something goes wrong.

    3. Always choose a longer settlement date (2-3 months). You can negotiate longer settlement even for auctions. This gives you time to find a good home loan rate by bouncing off lenders against each other.

    4. Some professions (such as doctors) can borrow upto 90% with no LMI. See if you are eligible as it gives you more financial flexibility.

    5. Westpac has a great rate at the moment (3.59%).https://www.westpac.com.au/personal-banking/home-loans/variable/first-home-loan/

    6. Loans.com.au is ok but they have some extra charges ( eg they charge $200 for a property valuation but big banks dont). They also have a lot of extra fees which you only really see on the loan documents. Make sure you carefully read the fine print with any lender including EXIT charges.

    7. Go to a mortage broker if your finances are a bit borderline. They know how to get your application over the line (wink wink). If you are rich, go strait to the bank, show them your money, and negotiate hard.

    8. Keep accounts with multiple banks. Then you can get them to compete against each other. Never keep all your loans with one bank because you have LESS negotiating power.

    9. Offset accounts are useless if you cannot save.

    10. Once you have your loan approved, go arpund to all the other banks to see if they can do better. Then sit back and watch the rates drop, discounts on insurance, other perks appear.

    11. You can buy multiple properties as an owner occupier. The bank will try to tell you that you need an investment loan (higher intrest rate) if you buy a second property to rent. If so, just tell them that you will rent your current house and live in the new one so you get the owner occupier intrest rates which are always lower. Banks dont care what you do (rent or live in it) after settlement. Note this does have CGT tax implications which is a seperate issue.

    Have fun

    • ggmm2013123 on 06/02/2018 - 22:25

      Thanks for the detailed response. Going through it now.

    • ozshaz on 07/02/2018 - 21:57
      +1

      All good points and helpful. Just not sure about point 11. Per my understanding sometimes its better to be upfront with the provider that you are after investment loan as they then consider the rent as a source of income for the loan which helps to increase the chances of a higher loan amount in case you want to borrow a higher amount as it increases your serviceability ratio ! That's my thought !

      • WTF on 07/02/2018 - 22:22

        Just say you will rent out your old home so they will count that as the income. So you get all the benefit of the rental income and still get the new home as an owner occupier (ie lower intrest rate).

        So many people get sold "investment" loans by banks for no good reason.A mortage broker told me of this trick. Saved me a LOT in intrest!!

        • ggmm2013123 on 18/02/2018 - 19:12

          HI WTF,

          as per my comment below, what you think? 100% fixed loan with 100% offset and no ongoing fees or charges.

        • WTF on 18/02/2018 - 19:21

          @ggmm2013123: Who is your loan provider? 3.69% with a bank is pretty good if you have an offset as well. Whould not recommend taking out a 100% loan though unless you have plenty of cash in hand to park in the offset account.

        • ggmm2013123 on 18/02/2018 - 22:47

          @WTF:

          Sorry I didn't get what you mean by not getting 100% loan?

          What I mean by 100% loan was - I have 20% deposit and remaining 80% would be all fixed loan. I am hoping to have savings to put in an offset account.

        • T-man on 19/02/2018 - 22:35

          Hi,

          Could you please explain more when you said “get sold investment loans by banks for no good reason”, I have an owner occupied loan ans going to apply for another loan for an investment property. Of course, I don’t want to tell the bank that is the investment property to get the owner occupied interest rate, just wanted to tell them that I’lll buy that house for my parents to leave in

        • WTF on 19/02/2018 - 23:48

          @T-man: Unfortunately, lots of people make the mistake of telling the bank that they are buying the property as an investment. The bank then offers an investment loan which carries a higher intrest rate. The banks dont tell you about the other options available.

          You can do what you have suggested (buying for parents) but if you do this, the bank will not count any rental income from the new property which may effect your ability to get a loan.

          The easier option is to simply say that you will live in the NEW property (ie you will be an owner occupier) and you will rent the OLD property. Get a rental assesment for the old property so the bank will count the income from the old property when they calculate how much they are willing to lend you for the new property.

          Hope this makes sense.

        • T-man on 20/02/2018 - 08:17

          @WTF:

          Thanks, can you enable your messenges box? I want to PM you privately.

        • WTF on 20/02/2018 - 14:24

          @T-man: done

  • ggmm2013123 on 18/02/2018 - 19:11

    Hi Guys,
    With help of one of the recommended broker,

    I am leaning towards 3.69% fixed rate 100% loan with 100% offset account. There is no ongoing fee and not much setup fee either.

    I am not planning to buy or change loan in next two years - do you guys see any drawback of this one?

    • atris17 on 28/02/2018 - 11:27

      COuld you have a fixed rate with a 100% offset account?

      I thought only variable rate allowed this

      • ggmm2013123 on 14/04/2018 - 00:09

        Yes, Uni bank (teachers credit union offered it)

        However I ended up with another bank

  • ggmm2013123 on 18/02/2018 - 19:14

    Also, I think that it is highly unlikely interest rate will go down. If it may not go up, it should remain steady.

    • WTF on 18/02/2018 - 19:23

      Intrest rates are most likely to stay the same this year although most are suggesting 1 or 2 rate rises next year. Source: my broker (aussie)

  • ggmm2013123 on 14/04/2018 - 00:14

    Hi guys, thanks for your assistance and guidance.

    Ended up contacting couple of brokers from suggestions and worked out well.

    If anyone comes here looking for an outcome:

    Try broker - there is nothing to loose.

    My broker answered almost 100 questions, answered my calls almost all times and called back straight away.

    On top of it you can negotiate cashback ($1000 in my case) which I am going to get after settlement.

    • ogisydneysider on 11/05/2018 - 11:50

      which broker did you use?

      • ggmm2013123 on 15/05/2018 - 18:18

        I went through Cape finance

        I initially contacted couple of other brokers recommended here but I was able to find better offer by myself compared to what they recommended. So I ended up contacting Cape finance and Tim has been fantastic.

        Let me know if you have any further questions, happy to answer it.

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