How do fixed loans work?

Discussion in 'Loans & Mortgage Brokers' started by Otie, 13th Feb, 2018.

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  1. Otie

    Otie Well-Known Member

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    ive never had any fixed loans, but a friend asked me today how it works when you have a portion of your loan fixed, eg 70%, and the remainder variable?
    Can you refinance the 30% variable with another bank or extract equity from that portion? This loan is her PPOR loan she has no IPs
     
    Otie, 13th Feb, 2018
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No because of the mortgage -security for the loan.
     
    Terry_w, 13th Feb, 2018
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  3. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    You can't refi the variable portion, but you can still get equity out with the same lender. Just make sure servicing is okay, and the current lenders cash out policy is conducive before you/she fixes.
     
    Jess Peletier, 13th Feb, 2018
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    yes yiu cna get a second mortgage with lender x for the 30 %. But. It's usually at a lower lvr and often at a higher rate

    As already stated, you can pull equity with the same lender if the servicing works, and importantly the val works, and the policy works around chas out etc.

    One thing that is a bit different today than a few years back ,.., the exit cost form the average 2 to 3 year fixed rate loan is generally reasonable, and if for an ip deductible in the year incurred if your accountant agrees

    Ta
    Rolf
     
    Rolf Latham, 13th Feb, 2018
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  5. Redom

    Redom Mortgage Broker Business Plus Member

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    In general it’s very difficult (impractical for majority) to have different lenders for one property. Generally borrowers who have multiple lenders have multiple properties too (and the number of lenders is equal to or less than the number of properties).

    Ie you rarely have two lenders with one security (guarantor loans the main exception to the above rule).

    So in your friends case, for all practical purposes, you can’t have a second lender do the variable but and the main lender do the fixed bit.
     
    Redom, 13th Feb, 2018
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  6. JasonC

    JasonC Well-Known Member

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    I rang up today to get a fixed loan break cost on one of my loans and found out it was $0... So in my case it was very reasonable. I'd seen some offers of better fixed rates with the same bank, so have cancelled my existing and applied for a new fixed rate at a reduced rate.

    Regards,

    Jason
     
    JasonC, 13th Feb, 2018
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    Eric Wu likes this.
  7. Otie

    Otie Well-Known Member

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    Her break costs may not be too bad. I’ll tell
    her to check it out
     
    Otie, 13th Feb, 2018
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Zero is uncommon :) but early 1000s is mainstream

    ta
    rolf
     
    Rolf Latham, 14th Feb, 2018
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  9. Eric Wu

    Eric Wu Well-Known Member

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    it is quite common now with very low break cost, many of my clients ( any myself as well) were pleasantly surprised with the $0 break cost.
     
    Eric Wu, 14th Feb, 2018
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