18 Apr 2024 Podcast: Q&A – Pt 2: Using Equity, Investment Rates, Loyalty Tax and How to Beat It

This week, we head into part 2 of our client Q&A, where Evelyn answers four more questions in detail, covering off on everything from taking a sabbatical from work, right through to how you can beat loyalty tax with your current bank. 

Tune in to hear Evelyn answer the following:

1. How does taking a sabbatical from work impact your ability to secure loan approval?

2. How do you refinance effectively?

3. How do you help clients by refinancing to help them build an investment portfolio?

4. What rates are you seeing for investment properties?

5. What tactics can be used to beat “loyalty tax” with your lender?

We hope you enjoy!

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https://www.everlend.com.au/

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You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at ​​https://www.everlend.com.au/

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Find out more about You Have My Interest at everlend.com.au/podcast and connect with us at podcast@everlend.com.au

You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest‘s content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.

It is not intended as a substitute for professional advice. Listeners should seek out a licensed professional to discuss their individual financial, legal and tax requirements.

If you need mortgage or finance advice tailored to your own personal situation, contact Everlend today for a free consultation. Everlend are authorised credit representatives of Loan Market Pty Ltd, Australian Credit Licence number 390222.

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Please find a Podcast summary below with the interview highlights:

Evelyn’s latest episode of You Have My Interest is part two of a Q&A series addressing various property finance topics, including sabbaticals, refinancing, interest rates, and strategies to negotiate better loan terms. Here’s a summary of the key points discussed:

Key Takeaways:

1. Taking a Sabbatical and Securing a Loan:
   • If you’re taking a sabbatical but have planned finances to cover repayments, lenders may assess this like parental leave.
   • To secure approval, provide a return-to-work letter with details of your re-employment date, income, and position.
   • Ensure sufficient savings to cover any shortfall during the break.
2. Refinancing Strategies:
   • Refinancing involves evaluating your current loan, interest rates, and product features.
   • Stay with your current lender if their revised rate is close to competitors, as refinancing costs can outweigh savings.
   • When releasing equity for investments or renovations, prioritise lenders offering higher property valuations to maximise cash out.
   • Use equity strategically, ensuring your borrowing capacity can support both the existing and new loans.
3. Building a Property Portfolio Without a Large Deposit:
   • Equity from existing properties can be used as deposits for new purchases, but this reduces borrowing capacity.
   • Serviceability is key: ensure your income supports repayments on both equity loans and new purchases.
   • Tailor strategies by comparing lender policies and valuation strengths.
4. Current Interest Rates:
   • Investment loans below 6% are rare, with most sitting above 6.2%.
   • Fixed rates for owner-occupied loans are slightly more competitive but still above 6% for most lenders.
5. Negotiating Better Rates with Retention Teams:
   • Loyalty tax (higher rates for existing customers) is a common issue.
   • Banks like CBA are aggressive in retaining customers—quote competing rates for similar products and request a match.
   • Highlight your repayment history when negotiating.
   • Retention teams may offer better deals to direct customers than brokers can secure.

Recommendations:

• Regularly review your loan every six months and negotiate directly with your lender to maintain competitive rates.
• Work with a broker to navigate complex refinancing and portfolio-building strategies.

Evelyn encourages listeners to reach out with questions and looks forward to discussing more topics in upcoming episodes.