refinancing on existing mortgage

[Xenia IM]

quick question. Interest rates have dropped since I have taken out some of the mortgages on my properties.

I want to refinance to take advantage of the lower interest rates, however do not want to mortgage any accumulated equity.

Ie a property is valued at $700,000 and the debt on it is $400,000, how do I ensure that no mortgage is taken over the $300,000 equity in that property?
Only the existing $400,000 debt on it.

I don't want equity to be refinanced unless it's for the purpose of another purchase.

 

[Jamie M]

Hiya

You just do a straight dollar for dollar refi.

If you think you may use the equity at some point in the future - it could be worthwhile extracting at the same time as carrying out the refi (rather than submitting another application later on - which results in another credit file hit). The funds can sit dormant with no interest payable until you actually use the money.

Cheers

Jamie

 

[Corey Batt]

The refinance will only cover the debt that you request it to cover - they won't increase the loan without your request.

Or am I reading this wrong and you're saying you don't want the extra equity to be secured against the debt? That's not how it works, the debt is tied to the title, which includes an equity of course.

 

[Jess Peletier]

Hi Xenia,

You may be able to negotiate a better rate without refinancing at all - have you spoken to your lender/broker? Depending on LVRs (which sound low if you've got decent equity) you might be surprised what they'll do to keep you.

 

[Terry_w]

I want to refinance to take advantage of the lower interest rates, however do not want to mortgage any accumulated equity.

A mortgage is placed on the property, not the equity. The loan can be taken at the same amount as existing.

 

[Xenia IM]

Thanks guys

this has helped get some clarity on what I want and what to ask for.

 

[Kinnon Bell]

First step would be to contact your existing bank and negotiate your rate showing them what you can get elsewhere. Tell them if they don't better it you will leave them. If they don't come to the party then refi out.

 

[Peter_Tersteeg]

Xenia what sort of loan is it? If it was a lo doc loan you'll probably need to refinance it to a full doc loan to get a better deal. As long as you've got a tax return this should be fairly easy.

If it was a full doc loan, then start by renegotiating the existing product.

Not touching the equity is as simple as replacing the $400k loan with another $400k loan. You'd only touch your equity in the event you want to borrow more against the property.