How to get a variable rate of 3.17% for your Investment Loan
Jason Khoury
JP, Financial Strategist, iChoice Managing Partner, awarded Best non-franchised Brokerage in Australia, MPA
Sorry for the radio silence guys!|
We’ve been flat out here helping people get owner-occupied rates for investment loans and so I thought I’d share with you what we just submitted for a client this morning.
Jane wants to buy an investment property for $2M. Besides working on a pre-approval at Westpac, we’re also refinancing her current home loan to another bank that offers an o/o rate of 3.17% not just for her small home loan, but for Loan B, which we're arranging to unlock equity for her forthcoming purchase.
Loan A: $300,000 3.17% variable – To Refinance her Home Loan
Loan B: $800,000 3.17% variable – To soon use for her investment purchase
(the $800K will simply sit in her Equity offset account until she needs it).
So even though she'll borrow 104% for the investment property (the golden rule), it will be spead across 2 banks to avoid nasty cross-collateralising. The loan we’ll arrange at Westpac will only need to be $1.3M. The Interest-Only Investment rate at Westpac will be 3.59%, but how cool that a decent chunk of her investment debt (the Loan B of $800K secured by her home) will be at 3.17%!
Down the track, if Jane ever decides to live in the investment property she’s about to buy, the loan at Westpac will immediately revert to an owner-occupied rate also. All she needs to do is show Westpac the back of her Drivers Licence to show that it has become her home. Watch out - other banks don’t allow a Category switch that easily. Most will re-assess to determine whether the loan can be serviced with your after-tax dollars! So many shoot themselves in the foot.
Is the property market booming? Hardly! I think the news on TV is a bit bullish, but hey at least there’s some kind of life in the market. The cash rate of 1% is not a badge of honour – more a reflection of stagnant wages growth & worsening unemployment. Just remember between 2004 and 2012 not much at all happened to property prices – hey don’t shoot the messenger.
Have a lovely weekend everyone! It’s school holidays for my little lads, let the fun begin hmm,