How soon can I refinance after purchase without incurring any side effects?

Discussion in 'Loans & Mortgage Brokers' started by property_geek, 14th Jan, 2019.

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  1. property_geek

    property_geek Well-Known Member

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    We just completed a purchase. We chose a particular lender because other lenders have constraints in terms of employment contract length. They were not giving full clarity on whether our loan would be approved or not prior to submitting application.

    Since the property was purchased in auction we had limited time to complete settlement. So we went ahead with a lender with maximum certainty of approval. Even though the interest we are paying with current lender is very high (4.8%).

    Now that we completed settlement, we have time to shop around and look for better interest rates.

    My question is: If we find a lender that is offering around 4% (2 years fixed), should we switch immediately? It would save us more than $1k per month on $1.8m loan.

    Would it affect our loan history in a negative way? For example future lenders( for future purchase or refinance) may think this guy is switching lender too frequently and may see my application less in their favour.
     
  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    no need to wait at all.
     
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  3. Redom

    Redom Finance Strategist Business Member

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    Not a big deal. If you got your initial loan through a broker, best to speak to them first too and ensure there’s no claw backs/let them do the refinance for you. Usually in these circumstances they may gameplan this move for you anyway.

    Also may want to check if your existing lender offers you the fixed option youre looking at.
     
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  4. Eric Wu

    Eric Wu Mortgage Broker Business Member

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    Usually you can refinance straight away ( unless there are special conditions).

    Re credit hits, busy file is not a good thing.

    If a broker has helped you with the current loan, maybe a good idea to discuss with him/her re possible option (rather than you do the running around and misguided by branch staff).
     
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Check that the lender you refinance too doesn't have a strict requirement when it comes to wanting to see 6 months worth of current home loan statements. It's silly I know! But some lenders have stringent rules that they don't like to bend.

    As Redom said above - if the loan was originated via a broker then consider providing them the opportunity to help. That's going to be a massive clawback for them to cop :-(

    Also consider whether fixing the entire loan is going to be beneficial to you. You generally can't link up an offset, make extra repayments, redraw ect from a fixed loan. Having said all that - I have no idea about your situation.

    Cheers

    Jamie
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Owner occ or IP?

    ta
    rolf
     
  7. property_geek

    property_geek Well-Known Member

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    IP
     
  8. property_geek

    property_geek Well-Known Member

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    You mean mortgage broker’s commission may be forfeited (or reduced) if loan is refinanced fairly quickly?
     
  9. tobe

    tobe Well-Known Member

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    Yep, within the first 18 months usually. They have the most skin in the game, get them to look at your options.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Talk to your mortgage broker about it. They did the right thing by making sure you could settle. Give them the opportunity to at least get some reward for this.
     
  11. property_geek

    property_geek Well-Known Member

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    I am going to look at refinance options with the same broker. If we could refinance successfully broker would earn commission on refinance as well. So his loss of commission on first deal would get compensated with new deal.

    Is my understanding correct?

    I don't want him to lose his commission as he worked hard to make sure we settle before due date.
     
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  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The broker will be paid commission by the new lender, but they loose the commission from the first lender.

    Keep in mind that the broker has now done the work twice, but only been paid once. They're probably making some money overall, but they're still doing you a favour.
     
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  13. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    I am not sure, but I think Latrobe don't do a clawback - as they make so much money on their fees anyway.
     
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  14. property_geek

    property_geek Well-Known Member

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    You are right. I just checked in my email history and in one of emails from lender to broker (which he forwarded to me) ,I see :

    "Commission: 0.5% plus GST upfront and 0.25% plus GST trail included in above with no clawback".

    So it's good for broker too if we refinance early :)
     
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  15. Anonymous-

    Anonymous- Member

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    Would changing from a variable to fixed loan be considered a refinance? I was going to have a chat with my bank and change to a fixed loan (with the same bank) but I can go through the broker instead if they're going to be impacted.
     
  16. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    No
     
  17. property_geek

    property_geek Well-Known Member

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    Changing from variable to fixed can be done over the phone in 15 minutes. No paperwork required. (from my personal experience with st george)
     
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