Refinance question CBA->UBANK

[prep]

Hi Guys,

I currently have 86% LVR 355k debt, 410k property (PPOR)

Ubank has valued my property at $440k giving me ~80% LVR

My intention is to more to a bigger PPOR in 12 months time, I would like to supplement my savings (20k) with equity from my current PPOR to use as a deposit for the new PPOR. current property will then become an investment.

Refinancing will cost me around 1k, so I will breakeven in around 11 months.

However, ubank only allows max 80% LVR. so in 12 months time I will need to refinance again to a bank that allows 90%.

I am wondering if I should not just approach CBA and ask for a re-valuation, grab the additional 30k equity and stick it in the MISA ? However CBA re-valuation process does not seem clear to me. They are basically saying they will happily top up my loan, however my not necessarily increase the value of my property. This is not what I want.

Any suggestions ? move to Ubank and re-finance again in 12 months or try get CBA to give me 30k equity now?

Andrew

 

[Rolf Latham]

Hi

if you need 90 % of value in 12 mths, and your move means 11 mths payback, my logic would say, stay put.

Dont ask for the 30 k UNLESS you think the val will reduce, which will be an issue in 12 mths time anyways, even if u take the 30 k now.

Easy in my mind, but then there are possibly considerations that we are not aware of

ta
rolf

 

[prep]

Hi Rolf,

can you expand on why I shouldnt (assuming I could) take the 30k now ? I wont be doing any more work on the house in the next 12 months and given Perths current market I dont see much growth anyway. Think I was lucky to not have it valued as it was 18 months ago!

Would seem like a good idea to take the 30k now if the market keeps dropping ? least I have it locked away in the MISA.

 

[Rolf Latham]

Hi

If you are RELIANT on taking the loan to 90 % in 12 mths time to complete the THEN purchase, then taking the 30 k now, may risk the lender providing more cash out at that time.

I did say it does depend on what you believe vals will do, so if you believe the property will be worth 400 k in 12 mths, then locking the equity now is sensible.

I cant quite work out your val expectations from CBA, nor you original LVR, although its clear, that you must have paid LMI with CBA to buy the place unless you had other security that is now removed.

Again, if you paid LMI to CBA , moving to U bank for a wee saving in rate will be blown away by the NEW lmi premium youd have to pay to go back to CBA.

Looks like youd be best served to stick with comm

As an aside, im sure you have done the numbers on the new purchase and have worked out that you can afford it, AND that the bank will lend you the money under current conditions ?

ta
rolf

 

[prep]

Hi Rolf,

Thanks for clarifying.

Yes I paid LMI on the original purchase. My understanding was that I would have to pay this again anyway in 12 months time if I refinanced to 90% ?

I think I need to go and speak to CBA tomorrow and see what they say.

Servicing the new loan will not be a problem. (edit) bank happy to lend as well.

 

[Rolf Latham]

Yes I paid LMI on the original purchase. My understanding was that I would have to pay this again anyway in 12 months time if I refinanced to 90% ?

Hi

No, you wont have to pay all the LMI again if correctly set up.

Only for any NEW money that you take out, which is usually a fraction of the original premium


ta
rolf

 

[StuartW]

Ubank's max LVR is 80%... so if you need more than 80% in the furure, you'll have to refi again.

 

[Rolf Latham]

Ubank's max LVR is 80%... so if you need more than 80% in the furure, you'll have to refi again.

Freudian Typo......................

I know furure was meant to be future, but given the context furore may be appropriate too : )

ta

rolf

 

[Marty McDonald]

Classic example where rate chasing is a BAD idea. CBA in this case offers so much more.

 

[Mick C]

Due to your LVR- I would def stay with CBA; the LMI will be pro-rated based on your increase

Regards
Michael