iPom

Help!

We're looking at just buying a really basic house up here which we will tart up and make look nice and sell on in a few years.

I need advice on how to get a good deal with a good company. I've looked on the net and there seems to be hundreds of mortgage providers... How do I sort the wheat from the chaff?

Anything you know would be helpful.

Thank you.

teach

Hi iPom,
We used mortgage choice and they were fantastic. They are paid the same com by each company so won't palm you off with a bum deal to get more money. Hope that helps.
Regards
Sarah

SenoraJo

First of all, you have my sympathy - just been there! Took ages and loads of research b4 we finally got a mortgage.

Lots of brokers, eg. mortgage choice and e-choice (we found both very professional and helpful) but only as good as their products. They do get the cheapest mortgages from the banks, and of these one of the ANZ packages was the best with a comparison rate of 6.82%. Commonwealth also do a cheaper set of mortgages as Homepath.

Beware of low intro rates. The comparison rate is the one to look at. It takes into account the interest rate and all the application fees etc of each mortgage, so enabling an easy comparison.

I reccommend you have a look at two websites, www.cannex.com.au and www.infochoice.com.au. Both independently rate mortgages on performance as well as rates. These sites were invaluable to me as they will compare mortgages for you as well ie. you choose 3 and the site will bring up a quick comparison.

For what it's worth we found Advantage Finance and Nationwide Mortgage Corp had the best variable rates and both were rated superior. We went with AF in the end as we chose a split and their fixed rates were better. The comparison rates for the variable were both 6.65. For the split it was var 6.69/6.69 and fix 6.7/7.1 for AF and NMC respectively.

We chose one with fee-free redraw and internet/phone transactions which basically is the same as a 100% offset but cheaper, no fee. AF also allows salary payments into it's mortgages too.

Beware of tie-ins. Ratebusters have excellent rates but very long tie in periods and some make you go onto the var rate which is often high and then negates all the savings you made early on. AF & NMC have min periods of 5 and 3 yrs respectively, after which you can leave for just the exit fee $195.

Hope the above helps and good luck! PM me if you like, though I am a complete amateur at this (and now an alcoholic only joking! But I don't want to choose a mortgage again in a hurry, we had an offer in and nothing arranged :scared: )

Jo x

Caroline G

Hi, I got a brochure from an independent broker. It contains information about being a member of, 'PLAN Australia'. which I'll quote below;

"The Professional Lenders Association Network of Australia has minimum nationally recognised education standards for membership.

All members must have completed, or be in the process of completing, the minimum education standard of Cert IV in Financial Services (Finance/Mortgage Broking) by June 2006 (WA end Dec 2006). This is a requirement of PLAN Australia membership".

They say PLAN members offer a professional service, have hundreds of loans to choose from, choice of loans from the major banks & lending providers, they're specialists and have access to the latest electronic lodgment technology which enables them to compare loans in front of you.

They state they also operate under a strict Code of Ethics.

So maybe go via an independent broker who's a member of PLAN Australia and get them to compare and work out the best deal for you. They usually don't charge you (but do check) as they get commission from the lender they place your loan with.

Hope this helps a little....

iPom

Thanks everyone, this is great advice. I'm renting at the mo and stuck between purchasing now, or just staying renting and saving the cash.

I am really not sure whether saving more cash and putting down a larger deposit is really financially sound because it doesn't seem to make a huge difference to the mortgage in the long run.

We specifically want to keep the payments really low so that we can save a bit...


When you got a mortgage, can I ask what your conveyancing costs and moving costs were please?

Thank you.

iPom

Caroline I just tried to send you Karma to say thanks, but it told me I couldn't... but thanks anyway.

SenoraJo

Hi iPOM,

Glad to help - and thanks very much!

Our conveyancing with a solicitor (as oppposed to a conveyancer) is $1400 approx all in, including buildings and pest, letters, searches etc. No additional charges or out of pocket expenses to be added.

As most of our stuff is still in boxes from Allied Pickfords UK (we knew we wanted to buy soon) we will be hiring a ute and moving our stuff ourselves so not sure of costs. More than you'd want to pay I'd guess - like everything!

As regards the deposit, if you can borrow less than 80% of purchase price you'll save on mortgage lenders insurance. Plus if you get mortgage now on lower rate (assuming a rise is on the cards, which I am) and have a redraw - offset facility where you pay everything in and use your credit card, paying it off once a month, then you'll save on interest repayments twice ie. lower rate and you only pay interest on the amount loaned minus the balance in the account.

If you take time to save, will probably have higher rate, plus ?less money to offset. As interest on savings accounts is at best about 5.8-6.0% then putting any equity/wages etc into mortgage makes sense as you'll save more - 6.67% interest in our case x the sum - off your mortage. Eg $50,000 in a savings will only make 6.0 but same amount in mortage account if loan is $400,000 means you only pay interest on $350,000 thus saving you 6.7% interest on $50,000.

Oh God, who invented mortages and interest rates??? And by the way, NEVER look at the total amount you pay back, very, very scary :scared: and you'll feel sick to your stomach working out what you could buy with all the interest

You've been warned.....

Jo

thebears

My advice is to stop mentioning "buying a really basic house up here which we will tart up and make look nice and sell on in a few years."

This leds to a question of intent, which has taxation implications.

iPom

Sorry, I don't understand your post. We want to buy cheap to keep our mortgage costs as low as possible. In the UK we had a massive mortgage and it was hell when the business collapsed trying to deal with it.

We want to buy the cheapest we can, do it up as we live in it and try to save our cash until we can sell and get what we want... I'm not looking at an investment property, if that's your point?

iPom

Wow, Jo!
Thank you ... that is very helpful. We have to go see the bank I guess and get in touch with some mortgage brokers. I like the idea of being able to draw on the equity of the house through the offset mortgage.... that sounds excellent.

iPom

Hi Jo...
A quote from INFOCHOICE says

'On a mortgage loan of $300,000, expect to pay at least $15,000 in fees. With mortgage insurance, this will rise to about $17,470.'


That's a ridiculous amount of fees... is that for real?

Fardell

Doesn't sound right at all unless stamp duty has been included .... an independent mortgage broker is the way to go and particularly one that 1) pays it's agents the same amount regardless of the lender and 2) rebates you part of the commission. The latter are harder to find .. the banks don't like them although its illegal for them to discriminate against them .. try peaches.com.au. You should get back about $1,000 - just make sure the loan is the right one for you - that's where Infochoice is good for homework.

iPom

Thanks Fardell.

SenoraJo

iPom,

I' ve had a bottle of wine so bear with me....

Can't rememmber all the exact costs, but monthly repayements are about $2800 on a loan of $442,500. We have stamp duty of about $15,000 reduced from about $21,000 as we are first home buyers in Australia. Also we get $7,000 dollars rebate in the form of the First Homebuyers Grant, purcahse price is $567,500 and we are putting down $125,000. Although this is (alot) more than our current rent, we reckon it's worth it to have a place of our own. We can put up our paintings etc, settle in and know we are there for as long as we like until WE decide to move on. Not paying lenders mortagage insurnace as have borrowed less than 80% of purchase price.

We are not too far from you - central coast - but have had a bit of a shock at the house prices, have been looking for 5 months and for the aforementioned price have snagged a 4 bed, 2 bath bungalow, detached, with garden on 4 sides (1200 m2 approx) 10 mins walk from the beach. Not bad for round here - in fact the only place under $700,000 that doesn't need an extra £50,000 at least spent on it!!!

In short, have spent more than we planned, $567,500 plus about $8,000 on a home (taking into account the FHOG off the (reduced) stamp duty).

Hope this makes sense, am compis mentis but spelling is haywire!

Cheers

Jo

geordie downunder

Just go to a bank,forget the adverts for brokers,they make their money from commission which is an immediate conflict of interest,typical comm would be around 0.2% for the life of the loan plus an upfront fee from the bank.They may also try to churn you,approach you in 2 or 3 yrs and tell you they have a better deal,thus more fees for them and possibly a bigger trail comm.The banks are much the same, they are in competition with each other but it is a bit of a cartel,the comparison rate is the same as AAPR in the UK and should state that it is based on a certain amount at a certain interest rate for usually 25 years and should include all fees and charges.ME bank is usually the cheapest and has no fees but you need to be in a union or member of a super fund.they have info on stamp duty etc.Pay fortnightly as this means you make 13 monthly payments per year rather than 12,it usually saves around 7 yrs payments.for a short time you will pay very little off the loan as they usually start to go down quicker after year 12.A rough repayment guide is to multiply your loan by the interest rate and add on $200 per month,naturally the larger the loan the larger the error.All bank sites and Me bank have calculators on them for repayments.Good Luck.