This time of year can be pretty slow work wise and most companies are running on skeleton staff. From a personal point of view it’s a great time to stop putting off having a look at your largest expense and cleanup your mortgage.
In the past few months our own experience has seen a subtle shift in the market from borrowers looking to acquire properties to those that are looking to refinance. In the last month almost all of our enquiries have been to refinance existing debt.
The reasons for this shift can be as follows:
- Borrower’s existing fixed rate terms are maturing and they are using the opportunity to refinance.
- Their current lender has dropped the ball in looking after them (it’s amazing to see that when borrowers are coming to the end of a fixed rate term how appallingly they are treated by their existing lenders).
- Their current lender no longer offers competitive pricing• Their current lender is not interested in supporting their investment plans – which may include increasing their borrowing.
- Borrowers have a view that the property booms of Sydney and Melbourne have run out of steam and are waiting to see how the market plays out.
Either pick up a phone or send an email to ask a finance broker what they can achieve for you. A good finance broker should be able to send through a written comparison of the best deals out there, which you can compare to your own mortgage. If you’re getting a good deal, at least you know. If you’re not, then let the broker do all the hard work for you. It will cost you nothing. That’s right, NOTHING.
You will need to provide all the information that you otherwise would to a bank but your finance broker will have access to many lenders and their systems will have the best deals available at the time. A good broker will also fill out the application form for you and submit it to the lender of your choice.
Right now the best owner occupied rate in the market is 3.98%. This rate is offered through the broker market. A couple of months ago the best fixed-rate price was 3.89% (for two years). These are rates that your broker should have access to and should be informing you about. The best current rates offered by lenders are listed below.
Many borrowers have a bee in their bonnet about using a lesser-known lender. We don’t. Remember that you have their money and not the other way around. You can always keep your everyday banking accounts at the institution of your choice and have your mortgage with another lender. Contrary to many misconceptions this scenario is very easy to manage and can be established electronically via a direct debit when your mortgage repayment is due.
It’s important to note that banks have tightened their lending policies and it’s a little more difficult to borrow – particularly for investors. However, if you already have a mortgage, tick all the right boxes for eligibility and you’ve been behaving yourself, chances are lenders will fall over themselves to re-finance your debt.
If you don’t fit that bill, all the more reason to contact a finance broker and see what else is out there for you.
It’s important to remember that all lenders want your business – within reason. It’s up to you to determine what you want and communicate it to your finance broker in order to allow them to find the lender that suits your needs. Sometimes it’s more than just price. There can be other determinants such as:
- the amount of LVR (Loan to Valuation Ratio).
- whether or not you require Lenders’ Mortgage Insurance
- whether or not you want features such as offset accounts (not all lenders provide this)
- will you be borrowing in an SMSF? A limited number of lenders provide this
- you may have multiple borrowers including family trusts
- you may be self-employed.
- your income may be non-standard (workers compensation, disability pension etc).
The new-year will see many good rates but you’ll never know unless you incorporate it as part of your holiday cleanup.