Breaking a fixed rate to refinance with the same lender

[perthguy]

Years ago, I had great loans with Wizard that got sold, sold and sold again. In short, my interest rate was close to 10% at a time when the variable rate was under 6%. The loans had also got very messy and from memory there was about 7 splits across 3 properties (1 PPoR, 1 existing IP and one new IP).

I secured the services of a mortgage broker who get me a much better deal with another lender with three issues:

1. a condition of writing up the loans was that the 2 IPs be fixed rate at 6.39%
2. the PPoR was cross-collateralised with the new IP
3. the PPoR loan with an offset was quite small (for investment purposes)

The PPoR loan is fully offset and the fixed loans have 10 months to run.

I want to:
1. un-cross-collaterise the security properties
2. break the fixed rate and re-fix at 4.89%
3. finance a new IP I am about to purchase (around $500k)

At a rough estimate, it would cost $11k to break but save close to $14k in the first 12 months. Plus, there is the security of having 4.89% for three years.

Since I am re-financing with the same lender, fixing for three years and boosting up my loans by potentially $500k, is there any chance of the lender maybe relaxing the penalty interest a little or waiving it altogether?

This is something I will be putting to the mortgage broker but I can't see him until next week so until then I was wondering what others experiences are.

 

[Terry_w]

I secured the services of a mortgage broker who get me a much better deal with another lender with three issues:

1. a condition of writing up the loans was that the 2 IPs be fixed rate at 6.39%
2. the PPoR was cross-collateralised with the new IP
3. the PPoR loan with an offset was quite small (for investment purposes)

The PPoR loan is fully offset and the fixed loans have 10 months to run.

I want to:
1. un-cross-collaterise the security properties
2. break the fixed rate and re-fix at 4.89%
3. finance a new IP I am about to purchase (around $500k)

At a rough estimate, it would cost $11k to break but save close to $14k in the first 12 months. Plus, there is the security of having 4.89% for three years.

Since I am re-financing with the same lender, fixing for three years and boosting up my loans by potentially $500k, is there any chance of the lender maybe relaxing the penalty interest a little or waiving it altogether?

Those are mighty strange conditions. Who imposed them?

I would say there is little to no chance the lender will wave the fixed break fee costs or even reduce them. They may offer incentives on the new loan though.

 

[Singo]

Which lender if offering 4.89% for 3 year fixed loans? Ta

 

[perthguy]

Those are mighty strange conditions. Who imposed them?

I would say there is little to no chance the lender will wave the fixed break fee costs or even reduce them. They may offer incentives on the new loan though.

My mortgage broker told me the bank imposed the conditions. I tried to explain some things to him regarding my investment partner's income but he didn't "get it"

Anyway, I have had a good run with the new loans compared to the old ones, so I should not complain too much I just want to make sure I get a better deal this time around. I will probably just buy the new IP and wait for the fixed interest loans to take their course.

 

[D.T.]

Which lender if offering 4.89% for 3 year fixed loans? Ta

Cba on an introductory thingo I believe

 

[jrc77]

If the loans are with CBA (and you are intending to stay with CBA), I'd suggest giving Brady a call and see if he can help you out. He's done a great job helping me out with some of my CBA loans.

Regards,

Jason

 

[Mick C]

CBA 4.89% for 3 year is NOT a fix rate...it's an variable intro rate.

Which lender if offering 4.89% for 3 year fixed loans? Ta

3 years fixed 4.84%- Me bank
3 years fixed 4.88% - Teachers Mutual Bank
3 years fixed 4.89% - AMP, Heritage ...

Since I am re-financing with the same lender, fixing for three years and boosting up my loans by potentially $500k, is there any chance of the lender maybe relaxing the penalty interest a little or waiving it altogether?

This is something I will be putting to the mortgage broker but I can't see him until next week so until then I was wondering what others experiences are.

^ Im presuming it's CBA...there's a chance they will absorb the break cost if there's only less than 3 month to go...But 10 month it would be case by case and very rare; since your an existing client, Not "new money to the bank"

You may want to consider other lenders who are offering up to $1,000- $1,5000 cash back for refinance.

Regards

 

[perthguy]

Which lender if offering 4.89% for 3 year fixed loans? Ta

AMP

I would advise you to check out their loan products to make sure they suit. It's not just about interest rates.

 

[perthguy]

Im presuming it's CBA...there's a chance they will absorb the break cost if there's only less than 3 month to go...But 10 month it would be case by case and very rare; since your an existing client, Not "new money to the bank"

AMP. I'm also not in any kind of emergency... far from it. I can easily wait until 3 months to go.

You may want to consider other lenders who are offering up to $1,000- $1,5000 cash back for refinance.

Will do. I will see what kind of deal AMP are offering and then shop it around and see if I can get a better deal.

 

[Mick C]

0 chance AMP will absorb the break cost....i would be pleasantly surprised if they do.

 

[Colin Rice]

You may want to consider other lenders who are offering up to $1,000- $1,5000 cash back for refinance.

15k, where do I sign?

 

[Mick C]

LOl typo....ohhh the bloody extra 0

 

[perthguy]

0 chance AMP will absorb the break cost....i would be pleasantly surprised if they do.

I will ask without an expectation they will. I just ran a quick calc and my current deal saved me over $60k interest over three years compared to my old deal. I will stop complaining now.

 

[perthguy]

Incidentally, my sequence went Wizard->G.E. Finance->Pepper Home Loans.

Pepper are a shocker but were actually marginally better than G.E... they were really shocking!

 

[Aaron_C]

They won't pay the break costs in any way, so forget it.

 

[Rolf Latham]

Incidentally, my sequence went Wizard->G.E. Finance->Pepper Home Loans.

and peops say it will never happen again.................

ta
rolf

 

[Aaron_C]

and peops say it will never happen again.................

While I never say 'never' the chance of it happening again has diminished quite a bit.

 

[Aaron_C]

My mortgage broker told me the bank imposed the conditions.

This is just not true. A bank doesn't insist on a cross collateralisation or a fixed rate to get a deal done.

 

[perthguy]

This is just not true. A bank doesn't insist on a cross collateralisation or a fixed rate to get a deal done.

Woah! So my Mortgage Broker flat out lied to me? That's not cool

 

[Colin Rice]

This is just not true. A bank doesn't insist on a cross collateralisation or a fixed rate to get a deal done.

Unless you are using commercial property as security to purchase residential.