Refinance options. Which one?



From: David Edwards

Hi All,

Love this forum and would really appreciate some advice.

Just got finance approval for my first IP. Problem is I need to refinance my exiting fixed home loan to reduce the principal owing. I have 2 options and would like to know which would be the best.

Option 1 – Reduce loan to $80K, with a Line Of Credit of $50K. Cost to refinance - $4650.
Option 2 – Reduce loan to $130K with no Line of Credit. Cost to refinance - approx $2K.

I’m inclined to stick with option 2 and hold out for 6-12 months but the risk is that interest rates could come further down, which would cost even more to refinance if I wanted to obtain the LOC facility.


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Reply: 1
From: Miakat .


I recently went through this issue. My lender simply reduced the amount of my home loan (no cost) such that the IP could be secured against it. Hence my home loan was reduce by $25K and then my IP was financed at 110%. I take it from your email that your lender is going to charge you for this?

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Reply: 1.1
From: David Edwards

Thanks Mia. Yes they are. I've actually listed what they intend to charge me for both options. Option 1 $4650, and option 2 about $2K.

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Reply: 1.1.1
From: Gary Plotzza

Hi Ted,
Have consulted a broker to see if there are other options.

Gary p Flexible Mortgages [email protected]
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