Refinance for a longer term with the same bank

Discussion in 'Loans & Mortgage Brokers' started by SimonJackson, 28th Oct, 2020.

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  1. SimonJackson

    SimonJackson Member

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    Hi

    I have a couple of loans with CBA and quite happy with them. Is it possible to refinance with the same bank just on increase the loan term from 20 to 30 years, so that I have to pay less each month and my serviceablility increases, hence increasing my borrowing power?

    I think the term for this is debt recycling?
     
    SimonJackson, 28th Oct, 2020
    #1
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    It's usually possible to carry out an internal refi with the same lender to extend the term.

    Debt recycling is paying down PPOR debt - and then re-borrowing to invest.

    Cheers

    Jamie
     
    Jamie Moore, 28th Oct, 2020
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    craigc likes this.
  3. SimonJackson

    SimonJackson Member

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    Thanks Jamie. Would it be better in this environment to go with a different bank, with all the cashback offers available?

    I'm currently paying 3.03% variable rate for both the investment loans with CBA
     
    SimonJackson, 28th Oct, 2020
    #3
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Not debt recycling but certainly possible to do.
     
    Lindsay_W, 28th Oct, 2020
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  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Yep - it's worth looking around IMO. See what CBA are willing to offer - and compare it to others.

    Cheers

    Jamie
     
    Jamie Moore, 28th Oct, 2020
    #5
  6. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Sounds like you're paying P&I on your investments - might be worth getting a broker to take a look at your current structure to see if it's as efficient as it could be.
     
    Jess Peletier, 28th Oct, 2020
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  7. Czechy

    Czechy New Member

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    I'm assuming if you want to extend your loan term you'd have to go through a full assessment again? I'd like to do this at the moment but because I'm an expat my income shading has meant I can't as I don't pass the serviceability requirements. I've found this strange as if I'm with the same lender on P+I terms I don't see the increased risk...
     
    Czechy, 28th Oct, 2020
    #7
  8. SimonJackson

    SimonJackson Member

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    Yes, going through a full assessment is an issue for me too
     
    SimonJackson, 28th Oct, 2020
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Someone asked me about this and I suggested they calculate the total repayments under the 25 and 30 year option and compare the cost difference. Its signifcant. Not the savings but the extra cost. Be wary too on the retirement cliff. If 30 years extends you past expected retirement years there could be other issues to consider. eg are you later seeking to upgrade own home? And sometimes thing happen that affect the retireplan like redundancy, illness etc. Lost job etc ...Are you pushing too hard ? What does broker say ?

    eg $1m over 30 years is say $4490 per month. Total payments $1.61m v 25 years is say $5006 pm. Total $1.5m.
    Lender servicing may be based on an assumed rate of 7% not say 3.5% too. It could also reduce capacity to borrow by reducing the repayments ?

    The changes assume rates will be flat or fall dont they ? What happens if rates rise ?
     
    Paul@PAS, 28th Oct, 2020
    #9