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Can you beat this variable home loan rate


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#26 Jersey Caramel

Posted 05 August 2019 - 05:50 PM

View PostAliasMater, on 04 August 2019 - 02:42 PM, said:

You really need to look at the whole package, not just the interest rate.

Our interest rate is a fair bit higher. We get a free offset and free redraw though, which saves a lot. We also get our credit card free which is the real deal breaker. Our Platinum Mastercard would otherwise be $399 a year. I earn about $1000 a year in gift cards by having and using it, as well as saving on travel insurances, extended warranty which we use, and more.

I have looked at moving our mortgage but I always keep coming back to the deal we have as probably the best for us pretty much regardless of the interest rate.

Our mortgage is large,  so getting the lowest interest rate is our top priority.  I calculated that by getting them to drop our rate by 0.19%, but continuing to pay the same we will save over $17k over the life of the loan. The power of compound interest!!

We now have 3.09% with Ubank, no fees.  No offset but unlimited redraw.

#27 Mumma bug

Posted 05 August 2019 - 06:51 PM

The lowest we got to with an offset is 3.16 with ANZ. The branch member explained we could have gotten a lower rate but our mortgage is relatively small (mid 200s)

We want to refinance and ditch the offset because we have recent starting paying most of our income into the mortgage and redrawing once a month for bills etc

#28 AliasMater

Posted 05 August 2019 - 09:11 PM

View PostWaitForMe, on 04 August 2019 - 03:07 PM, said:

I dream of the day my mortgage is small enough to justify the $400 saving of a premium credit card fee...

You have misread my post. I am not sure if unintentionally, or deliberately to make that throw away comment?

I said you need to look at the whole package, not just the interest rate. I then gave the credit card and free offset as examples that can be of benefit, or add up if they are not free.  Annual fees are another example when it comes to looking at the whole package. The interest rate in isolation can be misleading. Surely that advice isn't worthy of snark?

For what it's worth, I don't just save $399 on the annual card fee. Read again and you will see that I gain approx $1000 in reward points annually which I exchange for gift cards (Coles), and I get free travel insurance, extended warranty, price protection etc. That saves us another circa $1000 a year. I haven't calculated the 55 days interest free where I can let money sit on my mortgage and save interest for almost 2 months before paying the cc off.

The free Platinum card saves me $72k over the life of the loan without even considering the 55 day savings in mortgage interest on absolutely everything we spend - bills, petrol, groceries.

Edited by AliasMater, 05 August 2019 - 09:59 PM.


#29 WaitForMe

Posted 12 August 2019 - 03:01 PM

View PostAliasMater, on 05 August 2019 - 09:11 PM, said:

You have misread my post. I am not sure if unintentionally, or deliberately to make that throw away comment?

I said you need to look at the whole package, not just the interest rate. I then gave the credit card and free offset as examples that can be of benefit, or add up if they are not free.  Annual fees are another example when it comes to looking at the whole package. The interest rate in isolation can be misleading. Surely that advice isn't worthy of snark?

For what it's worth, I don't just save $399 on the annual card fee. Read again and you will see that I gain approx $1000 in reward points annually which I exchange for gift cards (Coles), and I get free travel insurance, extended warranty, price protection etc. That saves us another circa $1000 a year. I haven't calculated the 55 days interest free where I can let money sit on my mortgage and save interest for almost 2 months before paying the cc off.

The free Platinum card saves me $72k over the life of the loan without even considering the 55 day savings in mortgage interest on absolutely everything we spend - bills, petrol, groceries.

I read it.

I don't think you understand.

You get $400 off the annual cost of a credit card. Thats it. You could pay the $400 and get all those benefits still.

#30 -Emissary-

Posted 12 August 2019 - 09:53 PM

To be fair, you don’t really know her finance structure to make a comment that it’s only worth it because of the annual fees and small mortgage.

She has a point - it’s how you structure your finance as a whole. A smaller rate wouldn’t win me over right away.

I pay a much higher rate than 3.05% but I need an offset. The free credit card is nice but the benefit of having an offset wins in the long run. Yes, I have a decent balance in the offset but one of the main advantage of an offset is for tax advantage if you ever want to convert your PPOR into an IP.

People slogging away at a mortgage at the moment might feel that’s out of reach but I have talked to people who didn’t understand how structuring where your excess funds would affect your tax deductions in the future. My friends are all taking this into account even if they feel they might never pay off their current PPOR let alone buy another investment.

You never know how your circumstance might change and you might end up wanting to move somewhere else, rent and rent your place out etc.

Separating excess cash for tax purpose is actually why offset accounts exist.

Edited by -Emissary-, 12 August 2019 - 09:59 PM.


#31 WaitForMe

Posted 12 August 2019 - 10:30 PM

The banks are brilliant at bells and whistles and bright shiny lights that blind and dazzle, and leave you worse off. I get sick of reading about people claiming credit cards and rewards points saves them money, when they generally do the opposite.

Did I say theres never a good reason for an offset? Maybe I did, too lazy to check... I'm sure there are but free credit cards isn't it. They are however a great way for a bank to encourage you to spend whilst also increasing the number of products you have with them, thus making it harder for you to ever leave.

As for having an offset because I may aspire to my PPOR becoming an IP, why wouldn't I just refinance as such time approaches?

#32 born.a.girl

Posted 13 August 2019 - 06:03 AM

View PostWaitForMe, on 12 August 2019 - 10:30 PM, said:

The banks are brilliant at bells and whistles and bright shiny lights that blind and dazzle, and leave you worse off. I get sick of reading about people claiming credit cards and rewards points saves them money, when they generally do the opposite.

Did I say theres never a good reason for an offset? Maybe I did, too lazy to check... I'm sure there are but free credit cards isn't it. They are however a great way for a bank to encourage you to spend whilst also increasing the number of products you have with them, thus making it harder for you to ever leave.

As for having an offset because I may aspire to my PPOR becoming an IP, why wouldn't I just refinance as such time approaches?

Because with an offset the money in there becomes the significant deposit for your next own home, while the amount owing on the place you're about to turn into an investment property, now accrues tax deductible interest rather than the other way around.

You can't 'refinance' your original place to fund your new home.

If you're refinancing on your new home then all of that interest is not tax deductible, while there's little to no interest on your (now) investment property.

I'm actually opposed to the current tax treatment of negative gearing losses, and as that's the only way we'd ever have been able to have an IP, have not got one.  The logic behind the above is absolutely sound, though.

#33 -Emissary-

Posted 13 August 2019 - 08:23 AM

View PostWaitForMe, on 12 August 2019 - 10:30 PM, said:


As for having an offset because I may aspire to my PPOR becoming an IP, why wouldn't I just refinance as such time approaches?

Because it doesn’t work that way.

You can refinance a PPOR to buy an IP because the purpose of the loan is to buy an IP. Interest on this is allowed as a tax deduction for the IP.

You can’t refinance your existing PPOR, buy another property, move into it and convert your old PPOR into an IP then claim all the interest as a tax deduction, especially if you had excess cash sitting against the loan account as a redraw. You can’t just withdraw the cash and use it as a deposit then claim the interest as a tax deduction. The ATO doesn’t allow you to.

I can tell you now that my current wealth package is more competitive than anything the online lenders can offer me and I know what my future use of my excess cash as well as my property will be. I’m offered 3.38% with a major big four with a free credit card, unlimited offset account, and no annual fees. As a package, this has been unbeatable. The credit card has its perks and considered to be part of the value proposition if I’m comparing like for like offering.

It is short sighted to think oh 3.05% vs 3.38%, your credit card value can’t be that significant to warrant the higher rate. But like the PP I have saved on travel insurances, earned $1,000 in cash back etc as well as structure my finances in a way that suits me.

People need to understand their own finances and also consider future use of their properties if they do have excess cash. It might not be something you think is possible now but you just never know how your circumstances might change in the future. It could potentially cost you being able to claim thousands in interest.

Edited by -Emissary-, 13 August 2019 - 08:44 AM.





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