Refinancing - 80% LVR with an offset - advice?

Hi all,

We're currently (pre Melb cup rate cut) being slugged 3.03% on our loan with bankwest. Disappointingly if we pay down the equivalent of our original loan to 80% LVR they'll bump us down to 2.83% but this was still (pre cut) not that flash. I do like the fact that we do all our private banking with them since our teens, and the offset - but finally the rate differentials is getting too much.

What are the goto lenders currently most are refinancing with at 80% LVR with an offset? Happy for cashbacks, but ultimately we just want a better rate and any net-win from cashbacks is fine.

Ubank is pretty upfront with 0 fees and what they do/don't charge. But it's been a pain looking at the likes of Homestar (tried online chat and they were elusive/just wanted to chat over phone… which is an alarm bell vs say Ubank's disclosure online). Is there an easy comparison tool (without being privacy spammed by the likes of mozo/finder etc. by using them)? Or are there generally accepted lenders who most goto? I am certainly not after a quick fix, we want a lender who continues to pass on the rate cuts and doesn't milk medium term loan book holders (e.g. only offer best rates to new applicants).

Also - we have no idea what the 80% LVR point would be for our house currently. Is there any way most estimate a potential loan/pay down required to get to 80% on refinancing? We are well into 80% with out offset funds on our current loan, but when doing a 'table top ' desktop val, bankwest's informal val over the phone reckons we are now back to 100% LVR or more (can't say exactly what once it hits 100%) - implying they reckon property has gone backwards in value since we built it? Surely prices haven't dropped 10-20%… but if we do a formal valuation via refinancing are we subject to pay the fee regardless of not making the 80% threshold? Or do lenders generally cover the valuation fee if your unsuccessful?

We've skipped over redraws as that saga of the banks not approving a redraw request in recent times reiterated our view that offsets are totally 'at call' (besides the tax differences which I wont go into). So essentially we'd love an offset, covered by the government's $250k guarantee. Would home loan lenders like homestar with offsets provided by other banks be eligible for the scheme technically?

Appreciate any other advice on what upfront fees or ongoing fees to look out for when comparing for refinancing… but more importantly keen to hear where everyone is going currently for the best rates! Be good to hear from existing refinanced households if you would avoid any lenders with switch and bait tactics.

Thank you!

Comments

  •  

    Here's Westpac's 2.29 % variable rate offer with $3,000 cashback and unlimited redraw. The "low" variable rate is due to an introductory discount rate of 1.64% on their "Flexi First Option Variable Rate" for 2 years, after which the dicsount goes down to 1.14% but you can always consider refinancing again in 2 years' time. The big miss is the offset account for you though, so just wanted to highlight that.

    Since yesterday, banks are also offering a "low" fixed rateof 1.99% for 4 years but I've noticed that there is a $395 annual package fee associated with that rate at some banks.

    You can also always go the mixed route of having some part fixed and some variable but best to take advice from a financial advisor (or other fellow netizens at OzBargain!) as I, too, cannot decide between the 2.29 variable and 1.99 fixed rate (especially with the $395 annual fee which kind of contrasts the actual savings in interest for the first 220k of the loan balance).

    •  

      Yeah I would definitley want to focus on an 'offset' for now, unless the gap widens significantly to a redraw only provider.

      Fixed rate is abit of a miss in our books. The old adage of the bank 'usually wins' when fixing seems to hold true. Not to mention the inflexibility of being locked in and unable to break the loan for refinance, or say the need to sell the house and get out (in an ermergency??).

      •  

        The old adage of the bank 'usually wins' when fixing seems to hold true.

        I agree.. they seem to have more resources to predict these things than us (while they can be wrong, I would like to think that the probability is low) 🤔

        I would definitley want to focus on an 'offset' for now, unless the gap widens significantly to a redraw only provider

        same here, i'd prefer an offset over redraw for the very same reasons you've mentioned.. but i've given up on finding an offer good enough which includes an offset feature 😞

        the need to sell the house and get out (in an ermergency??)

        yeah.. the only way out here would be if the borrower were to sell and borrow again to purchase another property, the lenders usually let them do this as long as they borrow from them. all this without break fees (so i've heard) since the lender would still get interest from the borrower.. but yeah, in an emergency, if one was just looking to sell and exit, it'd be a costly when locked in to a fixed rate.. this is the very reason i'm leaning towards the 2.29% variable too.. 🤞

  •  

    I'm with TicToc with an 80% LVR + offset. Started off at 2.84% and have been dropped 3 times to the currently advertised 2.19% (had to ask twice). Pretty happy with the service so far.

    They're also covered by the $250k guarantee as it is an Adelaide & Bendigo Bank account.

    •  

      So an online lender using another 'bank' account is covered by the gaurantee? so the likes of home loans.com.au, homestar finance etc. assuming they offer offsets, these offsets are covered?

      I read on the athena 3/11/2020 deal post that some complained TicToc were pretty horrible with passing on rate cuts to existing borrowers?

      Definitely dont want to get stuck with one of those lenders where you're forced to refinance 8 months down the track as they outpace new borrower's with rates offered to existing.

      •  

        So an online lender using another 'bank' account is covered by the gaurantee? so the likes of home loans.com.au, homestar finance etc. assuming they offer offsets, these offsets are covered?

        Do those lenders state their backed and funded by a bank? That should answer your quesiton.

        https://www.apra.gov.au/list-of-authorised-deposit-taking-in...
        https://www.finder.com.au/bank-protect-money#:~:text=Concern....

      •  

        I am not sure about other online lenders, you would have to do your research and find out. From what I remember, not many of these online lenders were covered by the guarantee.

        With TicToc, once you go through the initial application and are approved you are essentially an Adelaide & Bendigo bank customer and hence covered by the guarantee. You just get a much better deal than if you were to go through A&BB.

        I joined them at the start of the year and as I said I've had a good experience with them passing on the rate cuts, with 3 cuts passed on so far.

        •  

          For Tic:Toc, this means the deposits held in offset accounts are covered up to $250,000 under the FCS. But, if you hold deposits in other banking businesses who operate under Adelaide Bank’s licence, regardless of the amount, you will only be covered for up to $250,000 under the scheme.

          https://tictoc.com.au/home-loan-guide/offset-accounts-and-th...

    •  

      I just spotted that rate the other day. Haven't bothered asking yet, I figured I'd wait to see what they do with the latest rate cut. Did you just call up the number and ask or go through the online banking? I only moved a few months ago, and really can't be bothered moving again.

      •  

        Yeah I just called up and asked if I can be moved to the new rate, they said they would put in an application for me and get back to me. I got a call the following day to say I have been approved for the new rate. Previously I've emailed and this worked too.

        Might be worth waiting to see if they pass on the latest cut but seeings as they just recently dropped to 2.19 I have my doubts they'll go any lower.

        •  

          Yeah, me to. The website suggests they will make a decision by the end of the week, so I'll email them after I see what happens/call them if that fails.

  •  

    This deal looks good for your situation?

    https://www.ozbargain.com.au/node/578260

    NOT ADVICE

    •  

      Unfortunately not as 70% lVR or below..

      •  

        Check the other rates on the lender website as well? or did you just check the ozbargain post?

        •  

          Apologies only looked at the ozb post initially…

  •  

    Just curious also if anyone has refinanced with St George. Someone at work mentioned a 80% LVR was roughly 2.6x% with the 4k cashback. But when i look online the 20-40% bracket for deposit:

    https://www.stgeorge.com.au/personal/home-loans/refinancing

    a standard variable rate home loan has a compariosn rate of 3.61%?! Comes with the offset… but when i clicked more it has an initial application fee of $600 something, plus the annual package is $395? Haven't even looked at discharge fees or what else they charged.

    Maybe I'm doing something wrong but surely there would be a mid 2%'s comparison rate provider of the likes of ubank that doesn't charge feees left right and centr,e with an offset @ 80% LVR? Or is this realistically not possible?

    •  

      Yeah I'm in the process of refinancing with St George to take advantage of the 4k cashback.

      With an LVR of 80% I was offered 2.64% on their advantage package. That $600 application fee also doesn't apply under the package.

      •  

        That's pretty good then! I can check but since you're fresh applying, do you happen to know what relevant fees upfront, ongoing and on discharge/leaving apply with your product?

        If they don't have a discharge fee (or it's relatively ok) and no application fee that's a big positive if i can get 2.64% with the $4k cashback.

        I presume they are going to charge you a valuation fee, and the ongoing $395/month package fee (which includes offset am I correct, no additional charge)? Have you worked out the new comparison rate as such with all said fees?

      •  

        Curious if St George only offers this 2.64% over phone? As the publicly advertised rate is well above it at 3.19%…. Did you have to ask?

  • +1 vote

    Is there a reason you wouldn't talk with a mortgage broker?
    Their whole business is finding the loan that matches your precise circumstances best.

    I tend to think they cost the same as going to the lenders direct, as the broker payment versus commission to the lender mortgage team rep.

    •  

      I believe in a broker's role, just the broker itself which I need to find/get faith in. When we built/got this initial loan the broker charged a fee if you didn't continue - in hindsight silly, as most brokers don't charge if you don't follow through. I was a detail orientated person and found they just presented one or two options - not much interaction etc. Felt like anotherr number than the typical ideal of a broker e.g. does the crunching, presents options and explains why, knows how to work lenders if you plan to have a property portfolio down line etc… In the end i guess I had a bad experience and the textbook ideal of a 'broker' fell away. The loan wasn't 'bad' at the time, but i did feel it was always major lenders and household products, and I don't know how many brokers would canvas online only lenders etc if they get nothing out of it?

      For a major bank I presume it would be fine e.g. st george, unless the cashback etc. isn't offered if you use a broker?

      Happy to go broker if that 'ideal' deifnition of one holds out, i just don't know who to trust/go with .

    •  

      To chime in, I previously engaged a broker to help with a st George refinance (3k rebate at the time), after a few days he came back saying that st George wasn’t letting people borrow extra to meet the 250k min loan (my current mortgage is 220k ish). Instead he offered different options (no rebates but lower than my current rates) which I didn’t go with.
      Fast forward to yesterday when I found out about BankSA 4k rebate offer with a 200k min loan, contact same broker again, he replied today that BankSA didn’t lend to WA.

      I started the online application myself and got through to the final submission step without any issues so I figured he just wasn’t earning enough or any comission with BankSA, which is fair enough. But the false information is the bit I have issues with.

      P/s: Obviously the issue may be with just this one broker, I have used a few in the past without issues. It’s a convenience service with no apparent cost to the borrowers, but it’s worth keeping in mind that the options they present are for their benefits, not yours. Therefore do your own research as well.

      •  

        It is a bit misleading when they say brokers are "no cost". There is a cost in some sense… for most it is an easy way to get documentation and applications through with less hassle, and in an "ideal" world the purpose of a broker is the best rate. Where I fell short is I am pretty sure as mentioned there are a heap of low cost options that are not on a brokers affiliated books. Say they go through AFG as their whatever provider they call it, but certian groups that align with brokers will mean a few suspects, but not ALL the options. So the cost is essentially opportunity cost, rather than financial. They do sell themselves particularly on a 'no fee' basis to argue their case, but I'd say a broker can very well be costly if they have a smaller product offering and so offer you their best product which is worse than what you could get yourself (albeit with less work involved personally).

        •  

          Agreed, hence no ‘apparent’ cost.
          But it will definitely cost borrowers in the long run if they don’t do their due diligence.

    •  

      I use brokers when it comes to anything complex like new builds/moving multiple loans etc, but if it's a single mortgage account I have found little value historically when it came to refinancing.

      A lot of the lower cost lenders don't seem to deal with brokers, so even if you do speak to one, have a look around at some of the rate comparison sites and see what you can get yourself.

      •  

        one area I would love a great broker - but again yet to find one - is the mythical broker who works consistently with buyers agents and sophisticated investors: and so even if it's one mortgage now they know how to set you up for future growth.

        That said most just seem to work for themselves or their group and aren't geared at people who are 'forward planning' with the loan i.e. considering what the rest of a potential future property portfolio might need to look like.

        •  

          I can give you a recommendation for one such broker. Most of his clients are investors and he has good connections with buyers agents, real estate agents, etc all over Melbourne.

          •  

            @MrHyde: I wouldn't mind the recommendation if you don't mind sharing?

            •  

              @DunDeel: Have a chat to Peter Tersteeg at Sage Lending (sagelending.com.au). I have used him for all my properties over the last 15 years and I can highly recommend him.

              •  

                @MrHyde: Interested too. Does this broker of yours do rebates?

                •  

                  @ykwon10: Don't know. The cashbacks have been a recent thing and my last loan through him was 3 years ago. At the time, I did not get any rebates. At that time, I did check with other brokers and none of the other ones who promised to give rebates could actually get my loan approved; even in their software (let along actually get to the stage of submitting an application) - but Peter got me a loan approved and worked through with the lender all the way to settlement. He also worked directly with the real estate agents to get appraisals for rental income on properties, etc to work out the potential income. Thing with Peter is that he has always delivered.

                  Everytime I've tried other brokers; they'll come to the first meeting, send through the general offers that you already know about or not even bother to respond if they can't find a lender that meets our requirements.

                  So, if you have tricky situation or multiple investments or complex financials, Peter is great. If its a simple one house < 80% LVR, good income straight forward scenario; any broker should be able to handle that.