My career is in banking, and I know a little about home lending etc... As you built your home last year, I would guess that you're going to be locked into that contract for another 3 or so years, so even if you do find a better deal in a years time you're still likely to pay deferred establishment fees (def), early repayment adjustment (era) (if your loan is fixed) and forfeiting the amount paid in lenders mortgage insurance (lmi). If you kick up a stink you may get a partial waiver on the def and/or era if you're lucky, but it is almost impossible these days to get any form of refund on lmi - it's written very specifically and cleverly into the terms and conditions for both the loan and the lmi.
Kaytee and Pandora had exactly the right idea of a supplementary loan, you could even possibly get the supp loan as a line of credit (loc) if you were super keen, but locs can be dangerous if you're not disciplined. If you get a normal supp loan you can get it over a much shorter term, which means much less interest and you can pay it off faster than the 30 (or whatever) years of your mortgage. It means you pay mortgage interest rates, and can treat it as a small personal loan.
Also, if your bank has the product, I'd recommend looking into whether you can have an offset account as your everyday account and linked to your actual mortgage. Even if you don't have heaps of cash in there, every little bit counts and will save you guys interest and effectively shorten your loan term. It's worth looking into that even if you guys decide not to borrow anymore right now. Most banks can do a product transfer on an existing account to change it to an offset account, keeping the same account numbers, which means no changing direct debits or salary payments, yay
Regardless of when you actually built your house the DEF (as mentioned by Sepata aboeve) that you will pay if you were to pay this loan out will differ depending on which lender you went went at the time. As of 1 July of this year no new home loans can include any DEF however all loans that settled prior to them included DEFs. They last for traditionally 4 years from when your home loan is taken out. Depending on what the ratio between your loan amount and the original value of your property was you may have paid LMI (as mentioned also by Sepata). You may be entitled to a partial refund of this payment if you pay out this loan in the first 1-2 years but the % you get back is not that high.
You have mentioned that you now have $40K equity in your property while this may mean that you can borrow against it whether you can or not will be dependent on what the property is valued at. For example if property was valued at $300K and you had $40k equity or if property was valued at $600K and you had $40K equity will produce different answers.
Sepata's advice regarding offset account is really good. Basically is means that you put all your extra cash into that account which in turn reduces the interest that you will pay on your home loan.
On one hand you are picking a good time to look at re-negotating as the banks are all super competitive with their rates at present looking for new business. However you need to weigh up all the costs if you were to decide to change lenders. Getting an idea on what rates the other lenders would charge would be a good idea before you could approach your own bank/lender so you can try to get them to improve their rate to you without you incurring any fees.
if you can get a supplementary loan that would definitely be cheaper than taking a personal loan or using credit card.
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