Changing loan before settlement

I signed loan docs with CBA last week for a 3 year fixed loan @ 2.24%. Settlement is in three weeks time.

Now that CBA have dropped 3 year rates to 2.14% and made 4 year rates at 1.99% I'm already kicking myself for signing at 2.24%. At the time, I wanted to wait until the RBA dropped but with all the trouble getting the loan sorted I was hesitant to ask for a delay.

Is there any chance I can re-negotiate the rate before settlement?

 

yes

 

Thanks Terry.

After reading the offer docs I see the final rate is subject to change and depends on the reference rate at settlement. So it seems they'll now have a 3 year fixed reference rate of 2.29%. Minus a discount of 0.2% gives 2.09%. A great rate but a 4 year rate of 1.99% looks attractive.

 

Is it a purchase or a refinance? If you’re wanting to change the product/rate it will require a rework and it’s unlikely you’ll have it all approved/ready to settle within three weeks.

Cheers

Jamie

 

Implying that the longer term vision is for more rate cuts due to a declining economy past the next 4 years ?

 

Some lenders also have complicated "rate lock" arrangements to secure todays fixed rate for a future loan settlement. And charge fees to do that. That said I dont think a single person in this country expects rates to rise short term. Changing from variable to fixed can be arranged once the loan is settled.

 

Generally loan contracts are set up to obtain the fixed rate at the day of settlement (its a discount factor of the reference rate, which has come down).

We've seen some cases of rates around 1.8% in the middle of the volatility. I.e. some CBA customers may get big wins out of this now. E.g. loan being processed, discount of fixed rate provided and locked into contracts. Fixed rate then drops, but discount still applies.
Its unlikely many people were taking the 4 year product though.

Essentially that's a bit of luck - hopefully its panned in your favour.

 

It's a loan for a new purchase.

I've spoken to CBA this morning. They're saying the reference rate will come down to make the three year 2.14% but still waiting for clarification as to whether approved discount applies. I was expecting 2.09% as the approved discount was 0.2% and the quote stated "The quote is for the ‘Total Discount Approved’ only. All other interest rates such as ‘Reference Rate’ are subject to change".

In any event, the loan manager has put in an application to change to the 4 year 1.99% rate. Sounds like it will be ok but the 3 week timeframe is a little short considering there's a lot of other people also wanting to change.

I had some trouble with the loan amount due to being self employed, receiving JobKeeper and having large add backs on a previous year which they weren't adding back. Luckily partner is PAYG.

 

What is the reason? Could you share your opinion? Many thanks.

 

Thanks.
And I think with the fix rate, you will be limited around 10k/year only; the low rate with 4 years may include some conditions.

 

Banking hack: Split your 3yr fixed loan into a series of $30k amounts, giving you the ability to pay them all in full without penalty.

Somehow I doubt the banks would implement this.