Refinancing when retired.

Discussion in 'Loans & Mortgage Brokers' started by Grator, 6th Jun, 2019.

Join Australia's most dynamic and respected property investment community
  1. Grator

    Grator New Member

    Joined:
    6th Jun, 2019
    Posts:
    2
    Location:
    Victoria
    Is it difficult?

    Mid 60s, have 3 properties, 50% LVR, ~400k remaining, ~15 years left, the rent covers principal, interest and outgoings - minus about $2-3k a year depending on mantainence etc. Live in PPOR paid outright. Combined income about $30k a year (50% of super payout phase, and 50% dividends).

    And that's with them paying... 5.6% with AMP!

    Asking for a friend. They're a bit rusted on, low motivation to switch, "we'll end up paying more tax!", "no one refinances for retirees" etc... so I will probably push for a broker, but wanted to give them a hand - cause my thinking is even saving a few K a year is pretty big over the remaining life of their loan!

    Any thoughts or experiences?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    5,013
    Location:
    Melbourne, Nationwide
    Odds are refinancing would be very difficult due to low income. Even though the rent covers the holding costs, lenders have their own way of assessing serviceability which is both more comprehensive and a lot more conservative.

    The real problem here is that AMP has increased the rates by stealth. Every bank does this. If your friend simply rings AMP and asks for a better deal, they'll likely cut the rate by about 1% or more.

    A simple phone call should be able to get a much better outcome.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,617
    Location:
    Canberra, Brisbane and Sunshine Coast
    Hi there

    If you can demonstrate serviceability then refinancing IP debt isn’t an issue. It might be difficult here though given the low income.

    First thing to do is call AMP and tell them you’re refinancing though! That rate is too high. They might drop it over the phone.
     
  4. Grator

    Grator New Member

    Joined:
    6th Jun, 2019
    Posts:
    2
    Location:
    Victoria
    Thank you for your advice!