borrowing more from a fixed interest loan

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From: Dan Theman


Hi all

I was wondering if anyone can shed some light on this issue. I have a fixed interest mortgage over my PPOR but the amount owing is only about 60% of the property's value. So I wanted to borrow against some of the equity in my home (as a second loan) to invest in shares or a fund.
The problem is that my mortgage broker has told me that the only way I can do this is to discharge the current loan - because it is fixed interest I can't borrow against the equity until that period expires.
BUT if I discharge I have to pay the fixed discharge fee, plus mortgage insurance again plus application fee again ! All just to borrow about 30% more value.

Anybody know if this is true or not? I didn't know it was so hard to get access to equity and if so then I'll never get a fixed interest again!

Any ideas/opinions would be much appreciated

Thanks
 
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Reply: 1
From: Rolf Latham


Hiya

much depends on the loan and the lender, though I would be VERY worried about that sort of advice. Try another broker, or got to the lender direct or post your loan product here.

Ta


Rolf
 
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Reply: 1.1
From: Dan Theman


Hi Rolf,

The lender is homeside - which is a part of NAB. But they won't deal with me directly I have to use a broker. And I talked to NAB but they said the title is held by Bank of New Zealand (I assume homeside sources the funds from there).

The other possibility is to get a secured loan from BNZ? But I have no idea about borrowing from overseas and if it is even possible because valuations etc need to be done.

I take it that the second loan has to be with the same bank and that a mortgage over a title cannot go across banks?

My main question though is: is it a common practice among banks - to require payout of the original fixed interest loan in order to use the equity?

Thanks guys
 
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Reply: 1.1.1
From: Rolf Latham


Hi Dan

There is only one reason your broker would suggest that you NEED to break the loan. Homeside have minimum loan values of 50 k so that may be the problem.

If the 30 % extra you are trying to get is more than 50 k then you are away. Seek the services of another broker.

Ta

Rolf
 
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Reply: 1.1.1.1
From: Dan Theman


Thanks Rolf, I'll see if I can manage that. If I get the valueation I want I can borrow that much.

That will only leave 10% in equity but I can handle a small amount of mortgage insurance again if I don't have to discharge my nice fixed rate of 6.39% :)

Will let you know how it goes.

Dan
 
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Reply: 1.1.1.1.1
From: Russell Chellew


Hi Dan,

I would suggest that you ring Homeside back and have them direct you to another broker.They will have a short list of reputable brokers who would be happy to assist.

If you decide to set up a new loan of $50K ,I believe Homeside will calculate the Mortgage Insurance premium on total borrowings (existing F/Rate & additional $50K)and then deduct the premium you have already paid and you only pay the difference.

cheers

regards


Russell
 
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Reply: 1.1.1.1.1.1
From: Projects .


Dan,
Borrowing from the BNZ does not mean you are borrowing from overseas. BNZ have offices in Australia just as ING and HSBC etc. do and like ANZ, Westpac etc have in NZ. The requirements are just the same as any other locally based bank.

Projects

There is more than one way to climb a mountain.
 
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Reply: 1.1.1.1.1.1.1
From: Dan Theman


Thanks guys, I'll see what I can do

Dan
 
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