Refinancing homeloan - savings or no credit card debt

[Teeki]

Bit late in the thread here, but I would always get rid of credit card debt before putting money in savings. On a credit card you could pay anywhere between 11 & 20%, in savings you'll earn maybe 4.5%. So in the end, you won't actually be saving anything but you will need to pay tax on any interest earnt.

[Cassius2]

i love to refinance...we recently did as we were feeling that we werent getting a great deal anymore. had a quick look online to see what was available, showed our bank manager and told them we were walking...got a call back that night to tell us that they will better it and drop .10 off the loan rate for the life of the loan (amongst other things).

soooo...my tip would be to get them to take some percentage off for the life of the loan

[Now we're 3]

If you are refinancing the lender will look at your repayment history on your current loan and whether you've made the payments on time. Assuming that is all okay they will include as the others have said a % (normally 2/3%) of your credit card limit as on ongoing expense when they are working out what you can afford to now repay. They will/should ask you questions about what your other ongoing expenses are we they are now obligated by law to make sure you can afford to repay the debt. So for example if you had kids in private school this should be factored in when they are working out how much you can borrower. If you do have credit card or personal loan debt depending on how much you owe on your current loan compared to how much your property is worth it would be worth thinking about consolidating the debts together and closing the credit cards. This way you repay the debt at a much lower interest rate or much quicker if you continue to make the same repayments.

Main thing you need to work out if what you want your home loan to do for you. For example no point in paying a rate to have a redraw for example if you are never going to have extra money in there to actually redraw. At the moment there are some good fixed rates out there which won't be around for long so could be worth while considering fixing part of the loan especially if you can get the good rates.

I work in mortgage industry so pm me if you need any more info. Even if just to run my eyes over the offer that you get from your finance officer to see if it is good or bad.

HTH

[misty]

If you aren't closing the credit cards down, then reducing the debt on them doesn't matter. It is the total limit that is included as a liability - because regardless of whether you have it paid down you are still able to run it back up the next day.

[Liviam]

Thanks ladies. We only have one credit card and the limit is a few grand so it isn't much at all.

I am definitely going to negotiate rates/perks/benefits to ensure we get the best deal we can this time even if it means moving all of our accounts. We got a really crappy deal last time because we just didn't know any better.

thanks for all the great tips/advice. I must admit I still find it really confusing but I'm getting a better understand, I think anyways, LOL!!

[Liviam]

Thanks ladies. We only have one credit card and the limit is a few grand so it isn't much at all.

I am definitely going to negotiate rates/perks/benefits to ensure we get the best deal we can this time even if it means moving all of our accounts. We got a really crappy deal last time because we just didn't know any better.

thanks for all the great tips/advice. I must admit I still find it really confusing but I'm getting a better understand, I think anyways, LOL!!

[sangie]

It's daunting isn't it? Definitely see what rate/benefits you can get and then it might be worth seeing if your current lender will match it. Often they will as they don't want to lose you. Then you'll still get what you want without having to move all your accounts.
Good luck!