I bought a villa in nsw back in 2018 for $442k and now im looking to refinance my loan to anz 2.29% with $3k rebate.
I just recently got my bank valued at $450k and 80% of that is $360k, which means that ANZ can only lend $360k. My loan currently still $379k.
My broker advise me to just cover the 19k difference with my saving.
I just want to ask fellow people out there what do they think of this?
Should I just go ahead and cover the difference with my savings?
Asking for Home Loan Advice
Anth0ny on 30/06/2020 - 07:19
Last edited 30/06/2020 - 10:40 by 1 other user
Last edited 30/06/2020 - 10:40 by 1 other user
Comments
I expect this would largely depend on your circumstances. Do you have $19k spare, have you got an emergency fund, how stable is your jobs/market right now.
I would also be checking whether if you go with <20% you would have to pay another round of mortgage insurance. That may completely eat up that $3k but may still suit your circumstances better?
Can your current lender match ANZ offfer? Really not worth putting your own money back in the loan
Why don't you want to pay the $19k? You'll have less debt and pay less interest.
Whats your current interest rate?
my current interest rate is 4.45%
OK thats too high and not competitive. Ask for an interest rate review, tell them your intention is to refinance with ANZ for 2.29% and they will discount your rate.
Look at what the imposition would be for you if you don't pay the $19k.. Then weigh it up against what it would be if you did pay it.
You could then answer your own question if it's better or not.
Seems like a pretty rubbish investment. Ask your current lender to match anz.
just go to my bank and ask them?
Tell them you're looking at changing because their interest rate is almost half what you're paying. The worst that can happen is they say no.
Agreed. Tell them you got a better offer even send them the paperwork. Just don't tell them you don't have $19k
Call them and ask them. Say you are considering refinancing with someone and as they have a better rate and a sign on bonus. Don't mention the shortfall in funds. I have called my bank and had them drop my rate many times over the last few years.
Doesn't hurt to ask and try to get a better offer although the banks use third party evaluation companies that are now putting conservative estimates on properties with the current state of affairs. i.e. Covid, financial hardship with job losses etc.
As a few have said already it depends on your financial position and if you can come up with the 19k to cover.
Running over a few of your figures 379k @4.45% = 16,865.5 on interest
360k @2.29% = 8,244 on interest with 3k rebate(The 19k you would have to cover up front is equal to 2 years on interest on your current loan + the 3k rebate)
The figures don't lie and imo I would go with the refinance as you would have saved alot on interest to contribute and do P+I
Side note: I also have just refinanced my invest property as well and covered the costs of the refinance. Similar scenario as you are currently in and now in a better financial position with the lower interest rates now on offer.
Its not about saving interest - he could easily save interest by putting it in a redraw or offset.
Its a loss of $19k safety buffer - as once its in the loan and not redrawable - that money cannot be spent.I see that as a good thing. There is no temptation to spend the money on useless bargains listed on this site and there will be the motivation to save money and build up that savings again.
Yes, agree it does depend on the OP's self control not to spend it.
However, if he has self control, better to have money in the bank that is accessible in case he has an emergency.
If you really want to refinance, then yes. Otherwise you're going to get slugged with Lenders mortgage insurance (apparently for the second time). Unless you want to cop the LMI (twice) because you have/intend to have a loan for your main residence and you're thinking about the long term compounded interest factor.