Mortgage Refinancing Is a Headache - Need Some Help/Opinions

LOrochai on 02/12/2024 - 21:02
Last edited 03/12/2024 - 00:33 by 1 other user

Hi all, I've been trawling around the internet the past week or so, looking for a better deal on my mortgage. This is my first time refinancing, and I'm seeing so many options and all different costs involved and it's sending me for a spin.

From what I can tell, costs involved with refinancing are any fees from your new lender (e.g. application, settlement, valuation, etc.), the discharge fee from your current lender, and a discharge fee from the state government. Have I missed anything here?

With that in mind, and with some research, I've pulled 2 possible lenders to go with. I'm after some advice on what the best option will be of these (or suggestions if there is a better option I've missed). The other option is to trying to negotiate a better rate with current lender, though I have spoken to them previously and 5.99% is what they said - with a new valuation under 60% LVR (which I'm unsure if I'll make the cut).

Current Mortgage:
Regional Australia Bank
~$400,000 remaining
6.39%
No annual fees
$250 discharge fee
No offset

Option 1:
The Mutual Bank
5.89% variable rate
No annual fees
$0 establishment (they agreed to waive the fees)
No offset

Option 2:
Up
6.00% variable rate
No annual fees
$0 establishment
Offsets available

How much value is there in having an offset vs. redraw? Is the incremental value of getting paid into an offset account likely to make up the .11% difference in interest?

Edit: Current details added.

Poll Options

  • 2
    The Mutual Bank
  • 19
    Up
Financial Home Loan Loan

Comments

    • joka on 02/12/2024 - 21:44
      +3

      Why did they neg this?

      • soan papdi on 02/12/2024 - 22:14
        +11

        Because it’s a copy paste from ChatGPT.

      • JIMB0 on 03/12/2024 - 09:41

        Because they don't own a house.

    • Orochai on 02/12/2024 - 22:07

      Thanks for the information, lots of useful stuff here.

      With the offset/redraw options, I currently have redraw which I'm deposting ~$1000/month additional into. My understanding is the extra payment is going to work out roughly the same whether I put that into the redraw facility or an offset account. I'm looking at moreso if the incremental value of holding all my money in offset (i.e. using it as a daily account) will be enough to balance out the extra .11%

  • soan papdi on 02/12/2024 - 21:10

    Offsets are definitely better as it is still "your" money. Up is one of the few lenders that offers free offsets at a fairly low rate. Their app is very good and has many bells and whistles but beware their internet banking is app-only (i.e. no website at all). Even your home loan application is entirely within the app. Not a negative, just something to keep in mind.

    • blighst on 02/12/2024 - 21:52

      Depends… if you're looking to debt recycle, then offsets are your enemy.

      • Ponsonby on 02/12/2024 - 22:18

        Offsets are preferred in some circumstances e.g. if you may at some point be turning your PPOR into an IP.

        • blighst on 02/12/2024 - 22:20
          +1

          Sure, my point is more that it's not strictly better. Really depends on circumstance.

  • mortgagebroker on 02/12/2024 - 21:43

    Not enough information giving to give you an answer.
    Ask your lender first before wasting any more time.

    If they come back with 5.99%, that is most likely better than paying approx $1000 to move to 5.89%
    I don't know your loan amount so can't tell you.

    Do you use an offset? And what are your future goals with the funds in your offset/savings?

    • Orochai on 02/12/2024 - 22:02
      -1

      Loan amount is $400000. I'm currently paying ~$1000/month extra into my mortgage. I have redraw available to draw on this money if needed.

      I understand the extra payment is going to work out the same whether I put that into the redraw facility or an offset account, I'm looking at moreso if the incremental value of holding all my money in offset (i.e. using it as a daily account) will be enough to balance out the extra .11%

      Also, where is the $1000 coming in? My banks discharge is $250 + $165.40 for state fees. The fees from the new lender are being waived. Am I missing another expense here?

      • mortgagebroker on 03/12/2024 - 00:48

        I said approx $1000 as I did not have enough details.

        $250 is a cheap discharge fee.
        $171.70 NSW mortgage discharge fee
        $171.70 NSW mortgage registration fee
        Likely to be some legal fees, solicitor fees, PEXA fees.

        You are at $593.40 at an absolute minimum.

        I'm looking at moreso if the incremental value of holding all my money in offset (i.e. using it as a daily account) will be enough to balance out the extra .11%

        Depends how much you hold in your everyday account.
        if you have $1000 vs $10,000 will be a difference.

        .1% on $400,000 is $400. You will spend more on refinancing and on time spent researching (if you are a true ozbarginer)

        Go to your existing lender and ask for a discount.
        If not good enough, pick the offset if you are looking to turn the current property into an investment property in the future.
        If not, go for the cheaper rate. Redraw will likely be good enough.

  • Wiadro on 02/12/2024 - 22:13
    +1

    just go with unloan for 5.99%

  • SmiTTy on 02/12/2024 - 23:37
    +3

    Why don't u just find a mortgage broker?

  • avoidfullprice on 02/12/2024 - 23:39

    Instead of state government discharge fee, there is a title check from your new lender, and then title transfer fees to the state government

  • joka on 03/12/2024 - 06:46

    Find a bank the will pay you to switch loans. This basically covers the costs associated with switching and you will have some left over. Find the right broker and they will waive the fees.

  • DingoBilly on 03/12/2024 - 09:02

    You should be able to calculate the value yourself easily.

    You have $400,000 remaining. 0.11% of that is $440. If you have more than that to park in the offset it's worth getting an offset. Seems like it would be easy to achieve?

    Pretty simple.

  • vince088 on 03/12/2024 - 22:05

    Your headache could of been easily avoided if you used a Mortgage broker

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