Break fixed rate or not?

Good morning everyone.

I have a situation which I could use some general advice for.

I have a fixed rate loan with BOQ which ends in September this year but I am deciding whether to break the fixed rate as amp is offering 4.40% finance on variable. I am also looking to go to an interest only loan as our house will become an IP when we upgrade.

The reason I am looking at going to a lower repayment is because we are aggressively paying down our personal debt to get ourselves into a position to buy our next house around Christmas 2016.
With what we are currently paying, plus the difference between mortgage repayments, we could be debt free (minus our mortgage) within 12 months. Then once the debt is payed down the extra funds would be used to finish our reno, we just have the kitchen left.

This house was our first and was purchased at 97% lvr in September 2012. We are currently at 84% lvr so LMI would have to be payed again.

What would you do in this situation?
 
Hi, seemingly self evident answer. By the time you decide and the time taken for the paperwork, your fixed term would be up.

It's only 4 months, why bother with the fuss?

KY
 
I forgot to say that I worked out the current lvr using the realestate.com median price for the suburb. Is there someone I can pay to do a desktop val to get a better idea of the lvr?

Another thought I just had.
Would it be possible to refinance back up to 90% using a line of credit, then finish the renos and reval and refinance?

We have done a full reno on the house (minus the kitchen), new paint, new tiles and carpets, fans added, new bathroom and laundry, all fittings replaced plus landscaping.
 
Hi, seemingly self evident answer. By the time you decide and the time taken for the paperwork, your fixed term would be up.

It's only 4 months, why bother with the fuss?

KY

That's a good question. My answer is that the difference I would save in mortgage repayments is about 150 a week. So in 4 months that equals $2400 that would be payed into a personal car loan at a much higher interest rate.

However I don't know what fees I would have to pay in total for a refinance. This could be more than $2400
 
That's a good question. My answer is that the difference I would save in mortgage repayments is about 150 a week. So in 4 months that equals $2400 that would be payed into a personal car loan at a much higher interest rate.

However I don't know what fees I would have to pay in total for a refinance. This could be more than $2400

Ring them and ask for total fees. Then just work out whether your interest saved would be more than these fees.
 
And what about the Lmi again? This can be used as credit to refinance to reno and refinance to pull equity after the reno?
 
Will you save more than $1000 in that 4 months by moving to a new lender or breaking? It's pretty easy to weigh up.
 
And what about the Lmi again? This can be used as credit to refinance to reno and refinance to pull equity after the reno?

This is an avenue I have thought of however I was told BOQ was not favourable for investors and I would be better off moving elsewhere.
 
This is an avenue I have thought of however I was told BOQ was not favourable for investors and I would be better off moving elsewhere.

That may very well be true, but what was the Lmi premium you paid?

Also the lmi premium may be deductible over 5 years or the life of the loan which ever is shorter if the use is changed from personal to income producing.

So keep this in mind if your going to rent out and refinance as the remainder could be deductible in full.

Think bigger picture. No use throwing away 10k in lmi to save 1k in interest.
Come september you maybe able to negotiate a better rate than 4.4 with boq and still have the lmi to pull equity.

Just some things to consider in your overall goal.
 
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