Is refinancing too risky at the moment

Discussion in 'Loans & Mortgage Brokers' started by NeedMoreTime, 23rd Mar, 2020.

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  1. NeedMoreTime

    NeedMoreTime Well-Known Member

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    Hi, for the last few months we have been getting all the paperwork and approvals to refinance all our investment properties away from CBA, NAB and ANZ to Macquarie Bank to pull out equity to do a renovation on or PPOR. Given the current uncertainties with COVID-19 and impact on banks I'm concerned this is now a bad idea.

    On one hand if we do not go ahead now we will probably not get the equity in the near future when property prices drop, on the other hand moving form major Australian banks to Macquarie Bank could end badly if they get into financial troubles.

    Any words of wisdom would be great :)
     
  2. Terry_w

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

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    It is probably less risky to refinance than to stay put. You would, presumably, extend loan terms back to 30 years which would lower minimum repayments.
    If you do borrow extra to reno the main residence, this could be a bit risky, but you don't necessarily need to use these funds, you could keep them as a buffer, or even repay this money.
     
  3. NeedMoreTime

    NeedMoreTime Well-Known Member

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    Thanks Terry, getting a longer loan period and IO period is a good one for the positive. I'm more concerned with moving from Australian Banks we have been with for years to a new Non-Australian bank who would be less inclined to do the right thing by us if everything goes pair shaped. Maybe I'm being overly paranoid but then these are uncertain times.
     
  4. Terry_w

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

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    What makes you think that?
     
  5. Brady

    Brady Well-Known Member

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    Because Macquarie did it in the GFC...
     
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  6. Terry_w

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

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    Aren't they an Australian bank? I was asking why the foreign banks in particular would not do the right thing.

    I think Macquarie stopped lending but did they not do the right thing by existing borrowers? Not sure.
     
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  7. Mikey

    Mikey Member

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    Also looking to refinance in this current turmoil.
    ANZ has some reasonable variable rates at the moment. Anyone have any opinion/experience with ANZ? It may be a rumour but I heard they may review their variable rates independent of RBA announcements.

    Any benefits going through a broker as opposed to approaching the banks themselves?
     
  8. Jasper

    Jasper Well-Known Member

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    Could you please explain what they did? Thanks.
     
  9. Jasper

    Jasper Well-Known Member

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    My main concern about refinancing is - doesn't the title have to PHYSICALLY change hands between the banks? What if all of this gets cancelled for now and we're left in limbo?
     
  10. Never giveup

    Never giveup Well-Known Member

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    I am thinking to refinance PPOR.....
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Most titles are electronic these days. The process occurs online.
     
  12. Jasper

    Jasper Well-Known Member

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    Thank you. That's much more reassuring to me :)
     
  13. Never giveup

    Never giveup Well-Known Member

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    Do one need a SOA from FA if wants to pull equity as part of refinance
     
  14. Terry_w

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

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    I recall Macquarie just one day said no more loans - stopped lending completely. I think this included loan increases too.
     
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  15. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Some lenders will require this, but most don't. You generally have to give them an explanation of what the funds will be used for, which is consistent with their policies.

    There are circumstances where some lenders might want an SOA. The trick is to find the lender most suited to your needs and understanding what their parameters are.


    Macquarie is a very different lender today compared to what they were in 2008. They are now balance sheet funded, the same as the Big 4 banks and they have the same cash reserve requirements. Their deposits fall under the government guarantee. They've taken steps to remove their Australian business from exposure to the international arms of Macquarie.
     
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  16. shorty

    shorty Well-Known Member

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    Has servicibility relaxed at all in the big 4?
     
  17. Terry_w

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

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    No
     
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