Refinancing a mortgage

[Pandora]

Have you done it?
Whats involved?
Do you have to have a deposit as you would for a normal loan or can you just move the whole amount across as long as its under the loans required LVR (ours is between 88-91)?


I guess the deposit part is the main question I have.

I want to break my fixed rate loan. I know what the costs involved for breaking it are and Im prepared to cop them, as well as the risk that rates go up - they'd have to go up 9 times to get to what we're locked in at.

[alioops]

I cant remember what the rules where when i worked in mortgages, but I would recommend you see a mortgage broker as usually they will know the answers.

[Pandora]

thanks Ali yes we wil be seeing at least 2 brokers, after the issues with the current loan

[Doing my best]

We refinanced the whole lot, so no additional deposit.

[Pandora]

Thanks! Was that with the same lender or a different one?
Im happy with my bank just not my rate, but i want to look around and hopefully get something with an offset acct.

[Doing my best]

a different lender.

I am not sure how it works, and don't want to lead you astray. If you have any specific questions I can ask DH tomorrow.

[Fuzzywuzzy]

I would talk to my bank first and see what they can do. Because you are financing more than 80% LVR you would need to pay LMI (lender's mortgage insurance) because it is seen as a higher risk. This amount varies between individual banks depending on where they get their insurance from and can be a few thousand dollars. Having a 8-11% deposit to bring the LVR down to 80% would avoid . Good luck

[Pandora]

even though ive paid it already? that sux. ah well i can live with that given i'll be $600 a month ahead on repayments.

I think I will book in to see a couple of brokers

[Doing my best]

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[Fuzzywuzzy]

sorry wasn't very clear, only if you refinance to another bank, refinancing within your current bank it should be waived. Or if you just switch from fixed to variable it will be irrelevant. Are you wanting to swap to a variable loan? Have you checked if your bank has an offset account for their variable loans? or redraw, which is pretty much the same thing? I used to work in mortgage lending so if you have any other questions just ask

[skeetaboat]

Are you sure you'll be better off breaking your fixed mortgage? I'm pretty sure you only win if interest rates are falling, or if you can actually pay your loan down and therefore your new loan amount is less.

The break fee is usually the fixed interest rate minus the current interest rate multiplied by the total loan amount multiplied by the fixed period, is that right?

[Fuzzywuzzy]

The break fee is usually the fixed interest rate minus the current interest rate multiplied by the total loan amount multiplied by the fixed period, is that right?

Yeah, pretty much. It's the profit that the bank would lose when you break the fixed period