Why a “better rate” from a Big Four isn’t always a better deal: a Jetstar Captain’s $1.86M portfolio

16 June

A long-term client, four investment properties, and a CBA banker waving fee waivers. Here’s the conversation we had, and the maths behind why staying put was the smarter call.

Key Takeaways

A long-term Jetstar captain client, four investment properties, $1.86 million across three loans currently with St. George.
CBA pitched a refinance with waived fees of around $1,195 and a private banker, but the actual rate saving was just 0.09% at best.
Headline benefit was $1,800 a year, or $900 after tax on the top bracket. Switching costs were roughly $3,200, leaving him more than three years underwater before any real saving.
Waived fees and a friendly Big Four banker can dress up an offer that doesn’t make financial sense, especially for high-debt holders being targeted directly.
A better quoted rate isn’t the same as a better deal. The maths has to clear after tax and after switching costs.

Hi team. Wanting to walk you through a scenario that came up with one of my long-term clients yesterday: a Jetstar captain who rents where he lives and owns four investment properties.

I’ve held all of his lending for the last six years. We’ve moved him deliberately across three lenders in that time, a non-bank lender first, then Macquarie, then St. George, and there’s a reason for each move. It’s the same reason I want to talk about today, because it’s the lens we look through every time a new “offer” lands in a client’s inbox.

The strategy we’ve been flying

When you’re building a property portfolio as a pilot, the lender that helps you acquire isn’t always the lender that gives you the best rate once you’re established. Banks have different appetites. Some are generous on borrowing capacity. They’ll look at allowances, overtime and roster patterns the way they should, but their rates aren’t the sharpest. Others are sharp on rate but tight on policy. You can’t have both at the same time, especially when you’re still buying.

So the plan with this client has always been two steps. First, get the lender who can help him buy. Then, once the portfolio is built, move him to the lender who gives him the better rate. That’s how we ended up:

Starting with a non-bank lender to acquire the four investment properties.
Refinancing to Macquarie for a sharper rate once the portfolio was settled.
Refinancing again to St. George for an even better rate after that.

Every move had a clear financial benefit and a clear reason. That’s the standard.

The CBA email

Last week he forwarded me an email from a CBA banker. I have no idea how they got his details. High-debt holders tend to attract that kind of attention. The pitch was polished. They were offering to:

Waive the first year’s home loan package fee of $395.
Waive their internal settlement fee of $200 on each loan refinanced.
Set him up with a private banker.
Conduct a rate review every six months.

On the surface it sounds great. Around $1,195 in waived fees, a Big Four name on the door, and a banker checking in twice a year. If you weren’t looking closely, you’d sign.

Then we did the maths

Here’s where it falls apart. The verbal quoted rate was better, but only just. Across his three loans, the maximum margin was 0.09%. Some loans only improved by 0.04%. That’s the headline saving.

If we assume the best-case scenario, the full 0.09% saving across all $1.86 million in lending, that’s $1,800 a year in interest saved. He’s on the top tax bracket, so after tax that becomes $900 a year.

Now the cost side. Even with CBA’s generous fee waivers, he’d still have to pay:

St. George exit fees of $400 per loan.
State government discharge and registration fees of $370 per loan.

Across the three loans, that’s roughly $3,200 to make the switch happen. Put another way: $900 saved a year, $3,200 to get there. He’d be more than three years underwater before he saw a cent of benefit, and that’s assuming CBA’s rate stays sharp for that entire period, which is a generous assumption.

What the offer was really selling

The private banker pitch is interesting. A rate review every six months sounds like a service. But that’s already what we do for our clients, and we do it better, because we’re not tied to one bank. When a single lender reviews your rate, the only product on the table is theirs. When we review it, we scour the market and let the rest of the lenders compete for it.

That’s the part of the pitch that doesn’t make it into the email. The waived fees are real, but they’re the bait, not the deal.

The wider point for pilots and high-debt holders

This is the pattern. Banks target clients with significant debt because the long-term margin on $1.86 million in lending is meaningful for them. Even a small rate difference adds up to real revenue over a decade. So the offer gets dressed up. Fee waivers. Private banker. “Special” pricing.

My client read through the numbers with me and saw it straight away. He’s not going over. But plenty of people, especially those who are time-poor and not used to interrogating an interest rate offer, will take a deal like this at face value and accept something that costs them money to get into.

It’s the same instinct as cross-checking a flight plan before you push back. The numbers either work or they don’t. The brochure doesn’t change them.

How we run the numbers on any rate offer

When a client forwards us a rate offer, whether it’s from a bank, a competing broker, or a private banker who’s found their LinkedIn, we work through the same four questions:

What is the actual rate difference, in basis points, across every loan being moved?
What does that translate to in dollars a year, after tax, given the client’s tax bracket?
What are the real switching costs: exit fees, government fees, valuation costs, and any short-term loss of features like offset balances?
How long until the saving covers the cost, and is the rate likely to still be competitive at that point?

If the numbers stack up, we move. We’ve done it three times for this client already. If they don’t, we stay where we are and keep the lender we’ve got on their toes.

The Bottom Line

A better rate isn’t the same as a better deal. For a Jetstar captain with $1.86 million in lending, a 0.09% saving sounds like progress. After tax and after switching costs, it’s a three-year hole.

If you’re a pilot, a crew member, or anyone holding meaningful debt across multiple properties, and you’ve had an offer land in your inbox that looks too clean, send it through. We’ll run the maths the same way we ran it here. Sometimes the answer is to move. More often than people expect, the answer is to stay, and the value sits in knowing the difference.

Have a rate offer you want a second set of eyes on? Get in touch with the team at Specialist Broking and we’ll work through the numbers with you.

Daniel Jones