Re-finance costs.

[Dylan33]

I've just organised a re-finance from one bank to another through my broker.
I'm on a better deal interest wise and now have all my accounts with the same lender.
I needed 10k in cash on top of the re-finance for a small renovation on another PI.
Problem 1. it took months for this to go through, costing me lost time and resulting in a vacant property.
Problem 2. And the most frustrating. I asked for the 10k clear, I needed all of it to do the reno. I've ended up with 10k less the costs and some Mortgage insurance, resulting in not enough to finish the reno.
I agreed to the $1600 MI because it had dragged on so long and if I was to wait for further Val's on other PI's It would result in a longer vacancy period.
The broker has agreed to pay half the MI on account of the time it's taken.

But I'm still left with less than I need. This is the second time this has happened now. Last time I ended up with 9k from the 20k I applied for.

Is it up to me to ask for the expenses to be added on to the mortgage amount and leave me with the amount I asked for or is this a normal way of doing it?
Is this an easy out for the broker? Is he being slack or am I not asking the right questions ?

 

[Peter_Tersteeg]

In short, you can include your costs in the loan amount, but only up to the maximum LVR allowed by the banks policy. It's possible that the broker neglected to include the costs in the finance amount, but more likely that you're restricted by LVR in this case.

The lender you're moving to may only allow you to borrow up to 90% of the property value plus LMI. If the refinance costs would take you past 90%, then you're not going to get as much cash as you wanted.

Given that you're refinancing for a mere $10k in cash and needing LMI to achieve this, you're fairly highly leveraged and trying to be fairly aggressive about accessing your equity. In this scenario you're always going to be at the mercy of valuations and LVR limitations. This will continue to be the case until you build sufficient equity to the point where you're no longer pushing LVR limits.

People with 90% LVRs seem to have this problem a lot. Those who start with 60% LVRs never have this problem.

Regarding the time for the refinance, it is frustrating but the process can take a lot of time. 60+ days is not uncommon.