Possibility of Refinance immediately after settlement

Discussion in 'Loans & Mortgage Brokers' started by MIana, 2nd Jun, 2020.

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  1. MIana

    MIana Member

    Joined:
    3rd Jun, 2019
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    Location:
    Melbourne
    Hi guys,

    I have a question on refinancing and want to seek some advice from everyone. My property will be settled in a few weeks and I have a loan fully approved by the bank, just need to wait for settlement. It is Owner Occupied, PI , 100% variable. I'm planning to do a cosmetic renovation right after the settlement, and it will take around 2-3 weeks to be completed. I want to know if it's possible to refinance the loan immediately to pull out some equity generated by the renovation, and also change it to an Investment loan, IO with fixed-rate interest.

    Anyone did this before and how was your experience? Do I need to wait until the renovation complete or I can lodge a new application the next day after settlement? Will it be easier to do it with the current bank or switch it to a new bank. And with the original loan's just settled, will the bank consider a valuation higher than the contract price?

    Thanks
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    In short it can be done, after the renovation is completed and the property is revalued.
    To give yourself the best chance, get a broker don't just go back to your bank.
    Some questions for you:
    Why have you gone for Owner Occ P&I in the first place?
    If it's due to serviceability you might not qualify for an IO Investment product.
    Why do you want fixed rate on the IO Investment loan? Removes flexibility and ability to offset interest
     
  3. MIana

    MIana Member

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    Melbourne
    @Lindsay_W
    I bought this one with a long settlement. At the time of purchase, my intention was to move in and make it PPOR, and convert my current one into IP. Now I'm considering changing my plan and make it as an IP instead, so it make more sense to me to get an IO investment instead of PI OO and release as much as possible equity to pay back to the current home loan.
    Fixed rate IO looks attractive to me at the moment because of the low rate it offers, and I don't plan to do anything with the new property in the next 2 years, so I think fixed rate IO investment is a good choice.
     
  4. Terry_w

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

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    Some lenders will allow a revaluation done on the day or settlement and use that, other lenders will not want to allow a new valuation until the one they used for the loan is 3 months old and has 'expired'. Depending on the lender you could ask for an increase or might need to move banks to get it done.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    What is the LVR pls ?

    ta
    rolf
     
  6. MIana

    MIana Member

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    Melbourne