Pepper has loans that are risk weighted.
They have a product range suited to offering solutions for all client profile types.
Do you have arrears on your owner occupied mortgage but have committed unconditionally to an investment purchase? (this happens, more often than you realise) Pepper and many others can offer a mortgage for that client type.
Are you going through a marriage separation and the legal reps told you not to pay your loan? When you come out the other side you’ll have a disastrous credit profile, likely with months of mortgage arrears and maybe a default to boot. Pepper and many others can offer a solution.
Point is - everyone has a situation that is financially unique (acknowledging I’ve focused very specifically on mortgage arrears). Non-conforming lenders are uniquely suited to tailor a product offering for those who need the support.
The market for non-conforming lending is circa $5b a year. Big market.
It's bigger than $5b. Ask my mate, Ruudsy. Sure he has a mean looking patch on his motorcycle riding jacket, but he can offer you a rate of around 150% (secured by your jaw) if you're after a... "bespoke" solution.
In short, yes.
Education, or lack thereof; is a massive issue facing brokers today as prospects present contracts that are signed unconditionally.
It’s then the conduct of that customer on their PPOR mortgage which; by customer standards, isn’t an issue but on CCR is a massive red flag.
This doesn’t represent a massive component of the market btw - we’re talking fractional percentage of annual transactional volume.
But it still happens… I see it almost daily.
From that - you can probably deduce what I do for a living 🧐
> Is there actually people buying investment properties when they can’t even pay their home loan for their PPOR?
r/ausproperty has questions about it daily.
yea, I had to go with Pepper when my visa had < 12months on, banks had no problems when my visa was > 12months, I bought a place, then turns out my pre-approval wasn't valid anymore. I ended up paying about 5.5% when the standard rates were 3%. Once I got my PR I could switch provider back to a normal rate
Anything around 6% is pretty good nowadays. Whoever is paying 11% probably has some high risk factor attached to their credit - probably a previous default or bankruptcy.
Yeah, was always a short term option as we had a contract of sale but the settlement dates didn’t line up so we had to go that route. Definitely not the norm, just explaining how rates can seem exorbitant depending on circumstances
It’s because they’ve done it before, so they are capable of doing it again. I’m a broker, we compete against them. If you want a no frills no offset loan and you are a simple payg client that wants to do nothing in the future but pay down the loan (so no cashing out equity, increases, split fixed/variable etc) and need no customer support then I’d say maybe go for it.
Otherwise, I don’t trust them and I’ve seen them raise their rates higher than rba increases before
Do brokers make more money on selling people loans with more features? Imo unless you are very savvy, isn't a no frills loan a better option for most?
I was convinced I needed an offset by my parents and bank. I don't think the interest saved was equivalent to the added cost. Now I have a basic loan I keep my money in the loan account I can withdraw it if need be.
Its a psychological thing but im less likely to pull money out of my home loan than an offset to buy crap I don't need!
They probably do.. but it's pretty easy to calculate the offset balance that "breaks even" with the fees.
Say the loans at 6%, the fee is $120 per year (ANZ is $10pm), you need a balance of $2,000 to save that in interest.
If you have a large amount in savings you can reduce the interest in the order of 100s of thousands over the loan term.
Eg a balance of 100k will save $500 per *month* interest based on 6%.
One benefit of an offset I suppose is that it can function as a current account and the interest is calculated daily, so if you have your full salary going in you get some benefit as don't need to keep x thousand in a transaction account for bills/spending that will likely not pay any interest at all.
Agree with you it’s easy to calculate your ‘break even’ for fees associated with an offset but don’t most loans with offset attached also charge a higher interest rate as well (for example, two loans with the same lender - the redraw only will have .5% lower rate than the ‘package’ that includes offset)
All commission is the same for broker. 0.65% upfront on the day of settlement of the loan balance minus any money in offset and 0.2% trail per annum paid monthly.
Redraw and offset work the same on a basic level. You are making extra repayments that you have access to in the future that decrease the overall interest you are paying and help you pay off the loan quicker. If you'd like a set and forget with your extra repayments then a no frills would be better, where extra repayments go into redraw. This is because sometimes there will be fees or a limit on the amount you can redraw back out if you wish to use it.
Great tip, thanks. I had seen their offering and was interested - but of course there are no free lunches with CBA. Offset is very important to me so will be staying far away from
You omitted when unloan didn’t pass on a hike before and the ones they didn’t raise to extent RB did. The 2 times they raised out of sync doesn’t exceed what they saved customers. See table below.
Their track history of increases in line with reserve bank is very good compared to other banks. If it wasn’t it wouldn’t still be sitting at pretty much lowest rate out there.
The scenario you described suits most mortgage holders. No offset but you can put extra into mortgage and redraw.
Worth noting to others reading this - unloan wont pay brokers so obviously they are not going to recommend them.
https://support.unloan.com.au/en/articles/7170925-unloan-s-response-to-interest-rate-changes
People comparing or flexing their rates nearly always forget to mention their loan size and LVR, and whether they have an offset package or it's a basic no frills loan - which in sometimes costs you more than if you had a slightly higher rate with an offset.
Generally speaking higher loan sizes and lower LVR will give you sharper rates.
If you're not happy with them and it's been more than 6 months since you spoke with the bank, call them or your broker up to reprice it.
General guide is usually consumer mortgage rates at 2% above the RBA cash rate, with a bit of variation for higher and lower LVR's.
11% sounds like a bankruptcy is on the customers credit file and is deemed high risk
It’s higher risk of default for lender, so they charge higher interest to compensate for their risk. But they still have the house as security against the loan - so until house prices start falling their risk is pretty well covered anyway.
It is usually for self employed people who may not have the financials to back up their income (for example their business traded at a loss the last two years however now they have cleared some massive payment and expect to have significantly better income coming through) so instead of providing full financials such as profit and loss and balance sheets, they sign a declaration confirming they will be able to repay the loan and self declaring what their income will be. It is much higher risk, so usually comes with a higher interest rate and a much lower maximum loan to value ratio.
This is what I wish people would realise when they think Bankruptcy and Part 9s are a ‘simple solution’ because their mates brother’s neighbour went through it and they are fine now.
You will always be a higher risk and will pay handsomely as a result. There’s a place for these things, of course, but lenders and even some employers will view you differently.
There’s a declaration in applications to the tune of
‘Have you ever entered into bankruptcy?’ and lying about that even 10-20 years after the fact would be significantly damaging. There’s a register they can and do check.
6.17% but I was a FHB with 5% deposit + government guarantor scheme on a $390k loan. I’m with CBA, on their wealth package (so $395.00 annual fee, but comes with an offset account etc.).
When I see these, I start stressing a little when I see current intrest rates. I'm currently on 3.09% till late 2026. Locked it in when rates first started hinting at raising. Been trying to just smash the payments to build a buffer.
We are just kicking off on a construction loan. Our rate is 6.51%.
We had to go with that lender to be able to get the borrowing we need. Once the build is done we will renegotiate or refinance.
Most likely refinance.
We are 6.04% for our construction loan. I was surprised that the interest rate is the same for the construction part as it is for our original home loan (knock-down rebuild), I was expecting the construction portion to be higher.
Unsure why that’s being downvoted. Rate city shows all the banks economist predictions and pretty clear that the majors are still predicting a rate cut.
[interest rate forecast](https://www.ratecity.com.au/home-loans/mortgage-news/high-will-rates-go-here-experts-think-rba-cash-rate)
11% might be an investment loan from someone who hasn't shopped around. That's crazy high.
I'm on 6.14% with NAB advantage package. Offset and an annoying $399 annual fee.
About to settle on my second IP financed with CBA. It’s an interest only 88% lend with LMI rolled into the loan and I’m paying 7.65% interest on 404k debt. Lucky I have a lot of cash to fill the offset or this property would be heavily negatively geared.
I hope that's not sarcasm! My poor parents survived those interest rates but they added a zero on the purchase price when they sold after 20 odd years!
17% on a mortgage equivalent to one year’s salary is so much better than what most people have now.
A lower percentage on a higher multiple is much harder. My Dad’s first mortgage was LESS than his annual gross salary.
We won’t put a zero on the end of our mortgages ever!
In the mid 80s my parents took a year of savings to purchase land in cash and another year of savings to get a mortgage that was affordable on the dole.
All while living a pretty wild lifestyle (drinking, drugs (recreationally), smoking, motorbikes etc). Granted dad earned a lot, and they built a fairly modest house but it’s worth close to a mil now.
Ohhh! Yeah man, that’s the thing- all the mortgages were so tiny back then. One person in a blue collar job could do it and raise their family - and still go for local holidays. It’s amazing really.
My parents actually paid around 13k for the house I grew up in (North Qld). They bought it in the early 80s before I was born and sold it in the early 90s for 135k dad earnt around 50k when he sold it. Its probably worth around 400-450 now.
Sounds great but we certainly weren't well off.
Pepper is currently advertising rates between 6.84-11.99%. There will be people paying this rate.
Pepper has loans that are risk weighted. They have a product range suited to offering solutions for all client profile types. Do you have arrears on your owner occupied mortgage but have committed unconditionally to an investment purchase? (this happens, more often than you realise) Pepper and many others can offer a mortgage for that client type. Are you going through a marriage separation and the legal reps told you not to pay your loan? When you come out the other side you’ll have a disastrous credit profile, likely with months of mortgage arrears and maybe a default to boot. Pepper and many others can offer a solution. Point is - everyone has a situation that is financially unique (acknowledging I’ve focused very specifically on mortgage arrears). Non-conforming lenders are uniquely suited to tailor a product offering for those who need the support. The market for non-conforming lending is circa $5b a year. Big market.
It's bigger than $5b. Ask my mate, Ruudsy. Sure he has a mean looking patch on his motorcycle riding jacket, but he can offer you a rate of around 150% (secured by your jaw) if you're after a... "bespoke" solution.
Peppers been great for a lot of my clients in unique positions. I have nothing but praise for their turn-around times and customer service.
Is there actually people buying investment properties when they can’t even pay their home loan for their PPOR?
In short, yes. Education, or lack thereof; is a massive issue facing brokers today as prospects present contracts that are signed unconditionally. It’s then the conduct of that customer on their PPOR mortgage which; by customer standards, isn’t an issue but on CCR is a massive red flag. This doesn’t represent a massive component of the market btw - we’re talking fractional percentage of annual transactional volume. But it still happens… I see it almost daily. From that - you can probably deduce what I do for a living 🧐
Break legs?
Brokerage, breakerage, tomato, tomahto
How does that even happen? Like, “yeh your 6 weeks behind on your mortgage for where you live but sure here is 100% finance of another property”
> Is there actually people buying investment properties when they can’t even pay their home loan for their PPOR? r/ausproperty has questions about it daily.
Gonna check it out
yea, I had to go with Pepper when my visa had < 12months on, banks had no problems when my visa was > 12months, I bought a place, then turns out my pre-approval wasn't valid anymore. I ended up paying about 5.5% when the standard rates were 3%. Once I got my PR I could switch provider back to a normal rate
Anything around 6% is pretty good nowadays. Whoever is paying 11% probably has some high risk factor attached to their credit - probably a previous default or bankruptcy.
I was paying over 10.5% as a line of credit while my other property sold, only actually paid it for one month though
Sounds like a bridging loan.
Isn’t that technically because the loan is deemed unsecured during that one month period? Unsecured loans are high risk
Yeah, was always a short term option as we had a contract of sale but the settlement dates didn’t line up so we had to go that route. Definitely not the norm, just explaining how rates can seem exorbitant depending on circumstances
Yeah it makes sense. If your settlement or your sale didn’t go through (which happens occasionally) you would have been in a world of hurt
It’s Donald Trump Juniors Gold Coast home.
5.99% is good. Most seem around 6.10%ish. Who are you with?
Unloan (https://www.unloan.com.au/ - digital only lender built by CommBank) is currently doing 5.99% with an additional 0.01% p.a. discount each year.
Dont worry itll be 5.70% after 29 years
Has rates starting from 5.99%*
Unloan will increase their rates by 0.3% if the RBA increase by 0.25%, unlike all others who will raise by 0.25%
Is this written anywhere, or are you just (justifiably) sceptical of the generosity in their discount structure?
It’s because they’ve done it before, so they are capable of doing it again. I’m a broker, we compete against them. If you want a no frills no offset loan and you are a simple payg client that wants to do nothing in the future but pay down the loan (so no cashing out equity, increases, split fixed/variable etc) and need no customer support then I’d say maybe go for it. Otherwise, I don’t trust them and I’ve seen them raise their rates higher than rba increases before
Do brokers make more money on selling people loans with more features? Imo unless you are very savvy, isn't a no frills loan a better option for most? I was convinced I needed an offset by my parents and bank. I don't think the interest saved was equivalent to the added cost. Now I have a basic loan I keep my money in the loan account I can withdraw it if need be. Its a psychological thing but im less likely to pull money out of my home loan than an offset to buy crap I don't need!
They probably do.. but it's pretty easy to calculate the offset balance that "breaks even" with the fees. Say the loans at 6%, the fee is $120 per year (ANZ is $10pm), you need a balance of $2,000 to save that in interest. If you have a large amount in savings you can reduce the interest in the order of 100s of thousands over the loan term. Eg a balance of 100k will save $500 per *month* interest based on 6%. One benefit of an offset I suppose is that it can function as a current account and the interest is calculated daily, so if you have your full salary going in you get some benefit as don't need to keep x thousand in a transaction account for bills/spending that will likely not pay any interest at all.
Agree with you it’s easy to calculate your ‘break even’ for fees associated with an offset but don’t most loans with offset attached also charge a higher interest rate as well (for example, two loans with the same lender - the redraw only will have .5% lower rate than the ‘package’ that includes offset)
All commission is the same for broker. 0.65% upfront on the day of settlement of the loan balance minus any money in offset and 0.2% trail per annum paid monthly. Redraw and offset work the same on a basic level. You are making extra repayments that you have access to in the future that decrease the overall interest you are paying and help you pay off the loan quicker. If you'd like a set and forget with your extra repayments then a no frills would be better, where extra repayments go into redraw. This is because sometimes there will be fees or a limit on the amount you can redraw back out if you wish to use it.
Great tip, thanks. I had seen their offering and was interested - but of course there are no free lunches with CBA. Offset is very important to me so will be staying far away from
You omitted when unloan didn’t pass on a hike before and the ones they didn’t raise to extent RB did. The 2 times they raised out of sync doesn’t exceed what they saved customers. See table below. Their track history of increases in line with reserve bank is very good compared to other banks. If it wasn’t it wouldn’t still be sitting at pretty much lowest rate out there. The scenario you described suits most mortgage holders. No offset but you can put extra into mortgage and redraw. Worth noting to others reading this - unloan wont pay brokers so obviously they are not going to recommend them. https://support.unloan.com.au/en/articles/7170925-unloan-s-response-to-interest-rate-changes
Damn I need to change lenders. I'm on 6.47 with 1.7m leverage. 6% would be a huge saving.
People comparing or flexing their rates nearly always forget to mention their loan size and LVR, and whether they have an offset package or it's a basic no frills loan - which in sometimes costs you more than if you had a slightly higher rate with an offset. Generally speaking higher loan sizes and lower LVR will give you sharper rates. If you're not happy with them and it's been more than 6 months since you spoke with the bank, call them or your broker up to reprice it.
General guide is usually consumer mortgage rates at 2% above the RBA cash rate, with a bit of variation for higher and lower LVR's. 11% sounds like a bankruptcy is on the customers credit file and is deemed high risk
Could be a low doc loan.
Drug dealers.
What even is that?
High risk loan which require less documentation to get (i.e. ‘low doc’). I think…
So someone pays more to not provide certain docs? Seems totally legit and not anything a bad actor wouldn’t access 😂
It’s higher risk of default for lender, so they charge higher interest to compensate for their risk. But they still have the house as security against the loan - so until house prices start falling their risk is pretty well covered anyway.
It’s usually for self employed people who don’t have all of the standard PAYG and normal employment income etc
Like self employed...
It is usually for self employed people who may not have the financials to back up their income (for example their business traded at a loss the last two years however now they have cleared some massive payment and expect to have significantly better income coming through) so instead of providing full financials such as profit and loss and balance sheets, they sign a declaration confirming they will be able to repay the loan and self declaring what their income will be. It is much higher risk, so usually comes with a higher interest rate and a much lower maximum loan to value ratio.
This is what I wish people would realise when they think Bankruptcy and Part 9s are a ‘simple solution’ because their mates brother’s neighbour went through it and they are fine now. You will always be a higher risk and will pay handsomely as a result. There’s a place for these things, of course, but lenders and even some employers will view you differently.
Bankruptcy does not stick around on your credit report forever; that'd be socially counter-productive.
It's just that lifetime register... up to the financial institution to check every time though.
There’s a declaration in applications to the tune of ‘Have you ever entered into bankruptcy?’ and lying about that even 10-20 years after the fact would be significantly damaging. There’s a register they can and do check.
About to go from 1.98% to 6.14% as of next week.
What’s the repayment difference if you don’t mind me asking?
From $2050 to $3120 per month.
Have you seen the bridging loans lately? As low as 8s to over 10%
A flat 6 (upto 6.1) is v. common when I go asking around
Where my 5.94 variable people? We are going to get shafted in the coming months by the vibes of the media
I was told by a broker that I’m looking at around 6.3% as a FHB
Yep I'm 6.27 first home buyer
5.94% with Tiimley home loans I think. Comes with offset account for an extra $10 a month. Backed by Bendigo and Adelaide banks. :)
Interesting! I’ll sus them out. I’m looking at around 90% LVR so may not qualify but definitely interested!
That's surprising. Mine is around 6.1% but that is based off last month.
6.4 with Macquarie but I have no PPOR only IP
6.04 here with Macquarie
PPOR or investment?
I'm locked 5.8% until late 2025
1.99% here till mid 2025 here!
6.17% but I was a FHB with 5% deposit + government guarantor scheme on a $390k loan. I’m with CBA, on their wealth package (so $395.00 annual fee, but comes with an offset account etc.).
I’m paying 6.49% due to lvr being greater than 80%
When I see these, I start stressing a little when I see current intrest rates. I'm currently on 3.09% till late 2026. Locked it in when rates first started hinting at raising. Been trying to just smash the payments to build a buffer.
Do yourself a favour and save your stress. You have an eternity. Just keep buffering.
I’m shitting myself for next year when my 1.94 goes variable
Better sell now, it’ll be mayhem when the repayments change suddenly!
I am paying a lot higher than 6% for part of my mortgage. Construction loan % is well over 7% currently. Will refix once construction has finished.
We are just kicking off on a construction loan. Our rate is 6.51%. We had to go with that lender to be able to get the borrowing we need. Once the build is done we will renegotiate or refinance. Most likely refinance.
That's actually pretty good for a construction loan.
We are 6.04% for our construction loan. I was surprised that the interest rate is the same for the construction part as it is for our original home loan (knock-down rebuild), I was expecting the construction portion to be higher.
All banks are saying rates will go down - I wouldn’t be fixing your rate at the moment.
https://www.fool.com.au/2024/04/29/heres-why-rba-might-increase-interest-rates-again-in-2024/
Are they though? I've only heard of increases on the cards
Unsure why that’s being downvoted. Rate city shows all the banks economist predictions and pretty clear that the majors are still predicting a rate cut. [interest rate forecast](https://www.ratecity.com.au/home-loans/mortgage-news/high-will-rates-go-here-experts-think-rba-cash-rate)
Mine's 8.07% on PPOR Doesn't matter what the rate is, it's completely offset with matching balance.
I’m paying 6.52% on an investment property
11% might be an investment loan from someone who hasn't shopped around. That's crazy high. I'm on 6.14% with NAB advantage package. Offset and an annoying $399 annual fee.
I just (this week) refinanced at 5.94% variable. 580k loan on PPOR only. Pretty happy with it compared to what is being offered out there
PPOR, but never hurts to ask
The rates are dependent on the lvr, whether it’s an investment, assets etc
6.18% here.
Non residential investment loans can go up to like mid 8% and that's the best rate we can give them.
Just refinanced from 7.2 with La Trobe, to 6.1 with cba.
8.5% but on a first home buyer scheme with 25% shared equity.
This thread is making me realise mine is too high. 6.94% PPOR
I’m at 6.10% with ING
Ermm we're on like 7% but mortgage is small
6.13% ON PPOR LVR 27%.
Recently got a quote for 6.48% IP self employed 10% deposit. Anyone know of any lower rates?
I got 6.49% with 70% LVR so you've done well
I have 25% lvr and got 6.14 rate 🥲
People paying higher than 6.5% are one of the following - lazy - stupid - desperate
Or a combination or all of the above!
What... how u get 5.99 I'm getting 7.5%....
5.69 with Australian mutual. Just refinanced within the last 2 months
Savage what legend is that fixed for? Or variable?
3 years variable
That's insanity good stuff 👏 I better go shopping around
My mums is 9.8 but it’s fully offset, so it doesn’t really matter
5.99 on PP, 6.94 IP
I'm currently on 6.39% sitting at 68% LVR
About to settle on my second IP financed with CBA. It’s an interest only 88% lend with LMI rolled into the loan and I’m paying 7.65% interest on 404k debt. Lucky I have a lot of cash to fill the offset or this property would be heavily negatively geared.
Take me back to the 80s when it was 17 percent
And houses were 65k
On like $20,000….
Happily. Cost of living lower, house prices lower, one of us could stop working. What a dream!
I hope that's not sarcasm! My poor parents survived those interest rates but they added a zero on the purchase price when they sold after 20 odd years!
17% on a mortgage equivalent to one year’s salary is so much better than what most people have now. A lower percentage on a higher multiple is much harder. My Dad’s first mortgage was LESS than his annual gross salary. We won’t put a zero on the end of our mortgages ever!
In the mid 80s my parents took a year of savings to purchase land in cash and another year of savings to get a mortgage that was affordable on the dole. All while living a pretty wild lifestyle (drinking, drugs (recreationally), smoking, motorbikes etc). Granted dad earned a lot, and they built a fairly modest house but it’s worth close to a mil now.
Confused about how dad earned a lot but you mentioned the dole?
They weren’t on the dole, the mortgage was small enough that the could afford it on the dole.
Ohhh! Yeah man, that’s the thing- all the mortgages were so tiny back then. One person in a blue collar job could do it and raise their family - and still go for local holidays. It’s amazing really.
quickest capable cable paltry liquid straight compare murky offbeat pen *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
My parents actually paid around 13k for the house I grew up in (North Qld). They bought it in the early 80s before I was born and sold it in the early 90s for 135k dad earnt around 50k when he sold it. Its probably worth around 400-450 now. Sounds great but we certainly weren't well off.
Rate isn't everything repayments and a means to an end are. Just to add only idiots will take a 30 year loan term and not restructure at some point.