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Nathan P.
Nathan P.
Beaconsfield, VIC
13 Likes
7 Followers

4 months ago we purchased an existing home, which we want to do some work to. When is the earliest we can request a refinance with our Bank?

5 years ago
Comments

My question would be, do you want to refinance, or simply increase your existing loan?
If you're happy where you are, you don't need to refinance, & if you paid mortgage insurance, you'll be paying it again for the refi.
3-6 months is a reasonable period before applying for an increase. Valuations may also be more likely to improve after that as well.

Hi Nathan,
I would have to agree with Craig, a lot depends on your LVR as to whether your current loan is the most suitable to increase or whether a refinance could be suitable.
You certainly wouldn't want to pay more mortgage insurance if you were increasing to above 80% of valuation.

Responses

Hi Nathan,

You can refinance anytime, however depending on your current loan structure, there may be exit fees involved to do so.

Happy to chat further if you require assistance.

All the best,

Daniel Huy

will depend on if the house has gone up in value and if the existing lender will consider a mew valuation. rather than an increase of the existing loan you may have to refinance.

Hi Nathan
Most Lenders offer a Top Up loan which is simply increasing your current loan providing it is not a Fixed loan. In that case you may need to request a separate loan for the renos.

Two main factors to consider -
- do you have enough equity to borrow more ( this will depend on a new valuation)?
- will your income support the increased debt?

I hope this helps
Happy to chat anytime
Deb
-

Hi Nathan

You raise an interesting and common question as a lot of home buyers are pretty keen to get some work done around their new home.

My advice would be to contact your existing lender first and open the discussion with what you would like to do with the property. If you have borrowed 80% or less than you may have some options in being able to increase the loan amount depending on the nature of the work and the cost involved

If there is a lot of work you would like to do then you have the option of speaking to a licenced builder and getting some plans in place.

By speaking to your existing lender you could ask them if they would be prepared to value the property based on the council approved plans and the estimated market value at the time of completion of the work. You might find, if the lender is ok with this process, you might be able to borrow the funds you require.

Obviously any increase in the loan amount would need to be approved by the lender in terms of your income and ability to service the loan.

See how you go with your existing lender first and then perhaps speak to a couple of finance brokers for other options – if you have fixed any part of your existing loan you need to check on the penalty and exit fees should you look at another lender.

Hope this helps

Hi Nathan,

It depends on the type of work you are taking about. If it is structural you will need to supply building plans & quotes & this can be done as soon as you own the property.
If you are talking about more cosmetics work then you will need to wait for the Propety value to increase. Why not ask your broker or bank for a free Propety report to check your current property value.

I hope this helps

There is no minimum time, what you want to know is when does it make sense to increase your loan to pay for the renovations. Answer if you started with plenty of equity then your just re-bowering back some of deposit money. If you started with minimum equity or you borrowed 90% then ask yourself this question, will the renovations increase the value by enough to maintain 90% debt to value? If no, then it's not the right time.

anytime as long as you have built some equity
if you borrowed with LMI you will most likely have to pay the premium again .
might be better advised to raise a secondary loan
Your broker should have sort this goal in their initial fact find .....
love to know more about your loan structure

Nathan there should not be any problem refinancing anytime however you will need a broker to determine if there is any value in refinancing given some exit fees you may have to pay.

But quite a few lenders are offering cash back offers of $1500 for refinancing. Keep in mind other lenders want your business so most of the time they can give you a better deal and as a broker we can further negotiate on your behalf!

Hope that helps.

Jennifer
www.keyfinance.net.au

4 years ago

Thanks to everyone for all the advice, we have decided to hold off! 👍

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