Refinacing with low serviceability

Hi All,

I bought a PPOR and settled about 2 months ago (right in the middle of the pandemic - do not recommend!). Anyway, it's all going well and I love my house. But I'm not happy with my mortgage. I had to go with Pepper as I had the equity in my IP's to fund the deposit, but I don't have a huge income so didn't meet the serviceability criteria for the bigger banks.

Will there be a point in the future where the bigger banks will look at my history of paying this loan (and my investment loans) and realise that I always meet my obligations with loans? I'd really like to get out of this loan as at least with the loan type I have I can't fix the loan and I'd really like to do that as well. and of course the big banks have lower interest rates, which is nice too.

Any words of expertise would be wonderful.

 

Nope. you will need to demonstrate serviceability as per normal. This is because of legislation so it is unlikely to change much

 

How much you can borrow is directly related to your income. Lenders cannot approve a new loan simply on the basis that you've made the repayments previously at a higher rates.

Different lenders have varying policies around how they treat your circumstances, which means some lenders will lend more or less than others. Pepper has a few policies that regular lenders aren't as generous on, hence they can lend more.

Unfortunately the only way things would change are:
* Lenders change their policies - highly unlikely. More likely lenders will only become more conservative in the future.
* Increase your income.
* Reduce your debts.

 

I hope so! I hate knowing that I'm paying 1% more than I should be on my home loan

 

Thanks for that Peter. I'm working hard on increasing my income, so hopefully that will come to fruition shortly.