DO NOT REFINANCE YET- interest only loans

Posted Tuesday, 28 July 2015 at 14:36 by Shape Home Loans
Tagged: increasing your serviceability | Investors | interest rates | Mortgage reduction | APRA lending laws
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Investors and interest only loans set to go up

Rates are going up, but our suggestion is to let the lending market cool down a bit first before considering a refinance...as banks are curently changing their rates and discount every day!

When everyone is refinancing out at the same time, the "power of negotiation  " is less. So best to refinance when it's less active.

Refinance- Things to consider ( other than rate)

1. The lenders policy - Do they have a flexible policy for you to grow and invest further

2. Serviceability and borrowing capacity - Have you reached their max borrowing capacity. Not all banks made equal.

3. Cost to refinance - Average cost is $700 in total. Extra break cost applies for fix rates.

4. LVR and LMI cost if any - Any loan over 80% LVR may attract a LMI cost, which can be in the thousands.

5. 100% off set accounts - Important feature to have for your principle place of residence for tax reason

6. Interest only and tax advantages - Paying down a investment debt can reduce your tax benefits ( seek independent advice from your accountant)

7. Cash out/ equity required - Not all lenders treat cash out the same, some will have no limit some will have a cap amount.