Consecutive refinance

Hi,

I recently refinanced to NAB. Both as I was wanting to access equity and take advantage of the $4k refinance bonus my broker advised me I’d recieved.

now I’ve been told they deemed me ineligible as while the total loan was over the threshold in total with equity release the previous loan was under 250.

the loan itself was no better rate than I used to have and less flexible without unlimited offset I used to have.

I haven’t converted all my banking yet so rather than doing that and because the previous bank (banksa) was better with the structure and nab have done this plus made other errors I’m considering changing back.

BankSa currently have 4K refinance to neutralize the cost of the back and forth.

would doing this pose any problems?
I do hope to invest in another property potentially in the next 12months also

 

If your credit file isnt too busy it would be OK I'd imagine.

I hope you give the broker the opportunity to redo the loan as they will get all commissions clawed back (unless of course they were part of the issues).

 

To be honest i cant be certain if they were part of the issue or not.

To me it was their recommendation based solely on getting that cash back so it's hard not to feel the outcome reflects on them not doing their homework in making that recommendation.

He says NAB changed their interpretation

 

A couple of points/observations:

Every lender has had policy changes over the last 6 months, some of them on multiple occasions.

The NAB clarified their policy about a year ago on deals where the original amount was below $250k, but with a cash out component. It initially wasn't clear and they did pay out a number of deals until they later clarified this.

I'm also not sure what is meant by 'unlimited offset'. I've always thought that the St George group had one of the more clunky offset accounts. The NAB's is fairly standard and straight forward.

NAB is a long way from ideal for investors, but I've generally found them easier to deal with than the St George group.


Reading between the lines, it looks like an equity release was requested, but a full refinance recommended with the (false) incentive of $4k, otherwise the equity release would likely have been done with the same lender or with a different lender to the NAB. There are better deals out there than both BankSA or NAB, but the motivation is also driven by the cash back.

I can't say the proposal of refinancing back to BankSA is really any better. It's likely to result in a serviceability dead end for the sake of gaining $4k.

This is why I don't like the cash back offers. It's driving behaviour for wrong reasons in all parties - borrowers, brokers and lenders.

 

thanks peter. This was done in May with it finalized in June so sounds like he should have known?

BankSA allowed unlimited offset accounts. NAB I had to set up a split to allow 2.

the refinance back wouldn’t just be about the $$.
I have had only bad experience so far with nab, BSA set up suited me better and my other banking is still there. The 4K just allows me to correct a hindsight error and cover costs.

but I’m interested in the dead end serviceability. Is that clear cut in your opinion? Looking at investing in next 6-12 months potentially that would be a big problem.

 

My general observation is that the St George group is fairly conservative in their servicing policies. Without understanding your circumstances I can't comment how this might impact your plans. It may not be relevant at all, but I know for a few clients we've had to move away from StG for them to move forward.

 

Thanks Peter,
So from that though, its unlikely it would prevent servicing all together just maybe within the same bank? so keeping home loan with them but getting investment loan elsewhere wouldn't be likely to be an issue

 

Probably not an issue for this investment purchase, but what about the next one? If you want to buy a second investment property will you need to access the equity in either property in your existing portfolio. If so, will you have the borrowing power with your existing lender to do this?

It used to be the thinking that you'd use low servicing lenders first, then the higher servicing lenders later. I think this is a trap. If building a portfolio is your goal, I think you're better off simply ignoring the low servicing lenders completely. There's no strategic term benefit in using them at all.

Again, I really can't say how this affects your circumstances because I have no idea what they are. Also a good recommendation today might be a lousy one later as lenders change policies. There really is no simple answer to all this, the best think you can do is have a good understanding of your goals early on and continually keep them in mind when making decisions.