How to refinance in a falling market?

How does refinancing in a falling market work if the unit has been losing value consistently?

Situation : Purchased PPOR unit for $470k with a ~90%LVR in 2015. IO for initial 2 years. Then P&I and want to aggressively pay off mortgage. Make extra repayments. Current mortgage at ~374k. Current variable interest rate at 3.52% Value of unit per CBA Property app 265k. Next door unit sold for 340k a month ago.

Purpose of refi will be to be able to save on interest and direct that saving towards paying off the mortgage. Do all refinance applications involve a valuation ? If so, then there is no hope for moving to a better vendor ? Would you recommend refinancing at all ?

 

The property app probably isn't an accurate reflections of the true value. Although if an exact same unit sold for $340K I'd say there's not much hope with your loan balance at $374K - you're not on the worst rate either.
Yes all refinances require a valuation to be completed, might not be a full valuation, some desktop or automated vals would be ok if LVR less than 80% which doesn't apply to your situation by the sounds of it.

 

Ignore the CBA's online valuation. For some properties these tools can be accurate, for other's they're not even close.

Speak with a broker, figure out the most appropriate lender for your needs and get them to organise a valuation via that lender. If a desktop doesn't yield a reasonable result, then upgrade to a full valuation.

If the LVR is above 80%, the interest rate saving will probably not justify the cost of LMI.

 

In general, refinances when there's no equity doesn't work without changing this equation usually via loan pay-downs. Seeing a lot of this in Sydney now too for purchases made a couple years ago and current valuations being near trough (from valuers perspectives).

The new bank will do a new val, and recalculate the LVR position. E.g. if the value is $350k & your loan amount is at $374k, you'll need to bring the loan amount down to around $280 (80% of 350) before refinancing without repaying LMI.

 

Thanks guys.