Refinance when having fixed rate loan component

Discussion in 'Loans & Mortgage Brokers' started by mkbonline, 11th Jul, 2020.

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  1. mkbonline

    mkbonline Well-Known Member

    Joined:
    8th Apr, 2019
    Posts:
    192
    Location:
    Kellyville, NSW
    Hi Experts,

    I am looking to refinance my PPOR loan.

    Currently with AMP - Current loan balance of 930K @ 2.89% variable - 18 + yrs renaming and 485K @ 3.85% 3 yr fixed with 1.5 yr appx remaining. Looking for cheapest rate, 100% offset, unlimited redraw and additional payments.

    My research for re-finance led to below cheaper options

    Super Saver Variable | 2.19%*p.a. Var & Comp | Reduce HL - Just 2.19%
    Online home loans | Smarter Faster Simpler | Tic:Toc
    Online Home Loans and Everyday Banking Accounts - UBank

    Both myself and wife in top MTR bracket.

    My questions

    1. Is it possible to refinance, if you have a fixed-rate loan component? Will the new lender pay part of the break-up cost with the existing lender?

    2. Is there any catch in above mentioned cheaper options? In future, if I want to leverage equity of my PPOR and buy investment property - does online-only lender have that option?

    Cheers,
    Manish
     
    mkbonline, 11th Jul, 2020
    #1
  2. Terry_w

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

    Joined:
    18th Jun, 2015
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    Australia wide
    1 yes but penalty fees would probably apply. New lender will generally not pay these either..

    2. Do they actually have offset accounts? Or redraw labelled offset?
    Usually limits on loan splits and no so friendly to borrow further with these cheaper lenders
     
    Terry_w, 11th Jul, 2020
    #2
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
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    Location:
    03 9877 3000
    You'll pay a break fee on the fixed rate. You'll need to call AMP to determine what the break fee is, but it's usually significantly more than the anticipated savings.
     
    Peter_Tersteeg, 11th Jul, 2020
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
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    Location:
    Gold Coast (Australia Wide)
    Loans aint loans :)

    If u are on the top MTR, focussing on cheap rather than value and function will give you that sort of result.

    Im sure you arent driving a Mitsubishi Mirage.............................this does have 5 seats and provides transport.

    A well managed active debt recycling strategy may carve 10 to 15 years in payments off your homeloan....making rate

    As an aside, UBANK dont have an offset, only redraw I recall

    Further, with most non banks the following applies, and it does require consideration, more so in the current possible financial times,

    Best interest rates in the market in 2018

    Most people wait out the maturity of their current fixed rates, but in a declining rate market, its like death by 1000 cuts for many, and a swift exit would have been emotionally better, and usually financially superior as well.

    ta
    rolf
     
    Rolf Latham, 12th Jul, 2020
    #4