Refinance Worthwhile/Possible?

Hi all,

Before I waste a brokers time with a full application I thought I'd ask if a refinance is possible. The situation is:
PPOR = paid 750k in 2016, online vals from different sites are 850k+. My guess is mid 900's as we've done some renos.
Other debt = none
Credit card limit = 4k
Salary = 135K/year. I'm in an ongoing job, still on probation until March next year. I'd say there's no chance they could not pick me up though as I far exceed all the benchmarks for my role.
Current loan = started at 600K, now down to 572K. Have it split with some IO and some PI.
Money in offset/redraw = 200K
Savings = around $500 per week
Loan = single applicant, but I have a partner who works part time (contract) and a 3 yr old.

I like the structure I have currently but I'm not impressed by my lender jacking up interest rates, then doing the "we appreciate you've been with us for 10+ years but...." speech and the rates they're offering are not very competitive. I was leaning towards AMP professional package with a master limit for debt recycling, as the plan is to start heavily investing once the probation period is over.

In this climate do you think it will be possible to refinance this loan to at least the original amount? The online calculators make it seem feasible at >7% rates, but thought I'd ask the experts.

Thanks

Ross

 

Those numbers look ok for you to speak to a banker or broker but the missing piece is the living expenses. Your living expenses don't seem high if you are able to save $500 per but again this will come into it.

Next would be the IO component and how much of it there is as most lender don't like the majority of the loan to be IO.

We are currently leaning towards lenders that have decent fix rates with the way rates are going so a lot of people are doing combo loans of part fixed and part variable so they can a) lock in the rate and b) still have the ability to have an offset and execute debt recycling strategies.

 

Being on probation makes it more difficult but will depend on your living expenses.
whats the redraw/offset bit? These are 2 radically different things.

what's the rate?

If you refinance because of recent rate hikes, what would happen if the bank you moved to decided to up rates?

 

On the face of it, refinancing looks to be the solution you're seeking. Consider fixing the rate if you're concerned about rate movement when/if you refinance.

Also, as mentioned by Terry offset and redraw funds are very different things. Depending on which you have, this could make a significant difference on how your potential refinance will be structured in regards to loan splits and whether fixing rates suits your objectives.

See a broker who can assess your situation and see what's possible for you specifically and also factoring in you future objectives.

 

Sorry for the delayed thanks - had some surprise work pop up so I didn't have internet access.

I'm not a fan of fixed rates for flexibility reasons, but will sort out my finances and contact a broker to see what's possible.

 

Of course, it is ok.

According to your description, I put your scenario in banks who can accept probation. Both could give out $750k+ with PI repayment. The interest rate and condition are good. Surely, more information is needed, this is just an estimation in the calculator. However, it is not like a very difficult scenario to refinance.

The serviceability calculator often uses 7.25% as the assessment rate only to give the bank a buff against fluctuation. Generally, the loan lasts for many years. For example, the interest rate today maybe 3.68%, yet it could be higher than 6% ten years later. The bank wants to make sure you can repay it without a wage raise. Hence, no matter what is your real rate, they use the nominal rate to calculate.