Costs of Refinance

The figures in the example on this site are completely misleading. Some compontents are to low, some are too high. The summary figure is almost double what we see in most cases. Here's how you can accurately estimate the cost of refinancing...

* Exit costs are published on the website of your existing lender. It is disclosed on your loan documents but this can be increased over time. Most brokers will also be able to look it up in a jiffy.
* Mortgage discharge fees are published on the State Revenue Office website for each state. The same applies for mortgage registration with the new lender.
* The new lender should be able to quote their setup and settlement fees accurately.

On average I'd suggest the cost to refinance is about $600 - $800 plus the costs of setting up the new loan. As has already been stated, assume $1,000 and you'll probably get change.

Also keep in mind that repayments will continue to be calculated on the original loan right up until the time of the change over (settlement). The outgoing lender will charge this at the settlement so the payout figure for the old loan will be more than you actually owe.

 

@Peter_Tersteeg thanks for the input, good to have a second opinion on figures from that site.

 

@Jamie Moore never say never
But I think any new broker would be better suited to getting business outside of PC. Think all of you gurus well and truly have it covered here.

 

Hello everyone.

Quick question, just received some loan paperwork for a refinance and theres a government charge - Security Stamp duty which has been quoted in addition to the discharge and registration of mortgage fees. Why would one have to pay a security stamp duty on refinancing? cannot get any answer from the bank.

Thanks

 

You probably won't have to pay it - but they have to list it. It's a pain in the a** the confusion it causes - I'm always having to reassure clients that it's not going to be charged.

Cheers

Jamie

 

Thanks Jamie

 

Is it a NSW property? Quite common for them to quote stamp duty, but they should also include a declaration form for you to sign which will make an exemption. I can't recall the exact details, but contact your banker or broker for details, they should be able to provide it for you if you don't already have it.

 

Hi Peter

Thank you for your reply. Yes it is a NSW property . Will follow up for the exemption form as its not included in the paperwork.

Regards

 

Here it is...

 

Thanks Peter.

Having looked at the form if one is increasing the loan amount then an amount of duty is payable , correct?

 

No, you shouldn't be charged duty even for an increase. As Jamie says, this comes up all the time for NSW refinances (including equity releases).

 

Mortgage duty still applies in NSW in a few situations.
Legal Tip 18 Mortgage Stamp Duty (focusing on NSW) Legal Tip 18: Mortgage Stamp Duty (focusing on NSW)

 

There is a massive silver lining here.

Most LMI providers have a upper limit of how much you can borrow with anyone LMI provider somewhere in the $2-$3m mark.

So by revaluing and moving into a 80% loan ....for that particular LMI provider if you added addiitonal capacity to borrow using LMI.

This is how I built my portfolio....during the early days I was borrowing at 95% plus LMI capitalised....much harder now....more like 88-93% with LMI capitalised.

 

I was told there is mortgage duty payable to refinance a loan that is more than $1M. The loan is for a residential property in personal name. Is this true?

 

Depends on
State
Borrower
purpose

 

In NSW, in either single or both personal names, secured by residential property. And we were looking to refinance for better deal.

 

You don't give the purpose. Assuming just a refinance then s220(3A) Duties act limits the duty-free amount to lesser of the amount earlier secured by a mortgage or $1mil

but mortgage duty will be abolished on 1 July 2016, s 203A Duties Act

 

The larger loans over $1M are secured on PPOR. The smaller loans secured/are rental investments. I am not sure if they tally $1M per property or combined.

 

per loan.

"refinancing mortgage" means a mortgage that:
(a) secures the amount of the balance outstanding under an earlier mortgage that is discharged or to be discharged as part of the arrangements for the new mortgage, and
(b) is created to secure an advance to the same borrower as under the earlier mortgage, and
(c) is over the same or substantially the same property or part of the property as the earlier mortgage.