Hi everyone,
I've been doing some research on whether we should get out of our hideous loan with St. George. Our only option is ANZ because they are the only people that will lend us 95% LVR (because we have a Credit Card with them).
Here's the breakdown:
We are on a St. George Quick Start, No Deposit Loan - taken out three years ago. We fixed our rate for 3 years at 8.44% and have been paying an extra 1% interest for mortgage insurance. Once the fixed rate has expired, we revert to SVR (currently 7.8%) + 0.5% (making OUR rate 8.3%). St. George have us over a barrel on this loan product and will not switch our product or do any deals.
We owe around $334,000 ($330,500 + $3500 in exit fees, additional interest etc) on the property today. ANZ sent a valuer around who valued it at $350,000.
ANZ are prepared to put us on their 3 year fixed rate loan at 7.1% if we can come up with $5500 to cover the difference between what they can lend us, and what the pay-out is. We CAN borrow this money from my fiancee's parents.
We were all set to do it, until I (duh!) realised that Mortgage Insurance would be financed with the loan. Essentially, RIGHT NOW we owe around $330,500 on the principal of the loan. If we refinance, we'd be paying lower interest (by far), BUT our new principal amount would be around $339,500.
I'm thinking that reducing equity by nearly $10,000 on a property that already has such little equity is stupid. We'd find we owe just as much on the property in three years as we did today.
I haven't wanted to waste a brokers time, as ANZ IS our only option, and we've already done most of the paperwork etc. I just wanted to ask some money-savvy people what they thought.
Pay less interest, but increase loan amount? Or just keep plugging away at a high interest rate and hope it drops? We're getting married and were really looking forward to some extra cash...but we need to think about our future too, and what's best in the long run.
Thanks guys,
Sarah.
I've been doing some research on whether we should get out of our hideous loan with St. George. Our only option is ANZ because they are the only people that will lend us 95% LVR (because we have a Credit Card with them).
Here's the breakdown:
We are on a St. George Quick Start, No Deposit Loan - taken out three years ago. We fixed our rate for 3 years at 8.44% and have been paying an extra 1% interest for mortgage insurance. Once the fixed rate has expired, we revert to SVR (currently 7.8%) + 0.5% (making OUR rate 8.3%). St. George have us over a barrel on this loan product and will not switch our product or do any deals.
We owe around $334,000 ($330,500 + $3500 in exit fees, additional interest etc) on the property today. ANZ sent a valuer around who valued it at $350,000.
ANZ are prepared to put us on their 3 year fixed rate loan at 7.1% if we can come up with $5500 to cover the difference between what they can lend us, and what the pay-out is. We CAN borrow this money from my fiancee's parents.
We were all set to do it, until I (duh!) realised that Mortgage Insurance would be financed with the loan. Essentially, RIGHT NOW we owe around $330,500 on the principal of the loan. If we refinance, we'd be paying lower interest (by far), BUT our new principal amount would be around $339,500.
I'm thinking that reducing equity by nearly $10,000 on a property that already has such little equity is stupid. We'd find we owe just as much on the property in three years as we did today.
I haven't wanted to waste a brokers time, as ANZ IS our only option, and we've already done most of the paperwork etc. I just wanted to ask some money-savvy people what they thought.
Pay less interest, but increase loan amount? Or just keep plugging away at a high interest rate and hope it drops? We're getting married and were really looking forward to some extra cash...but we need to think about our future too, and what's best in the long run.
Thanks guys,
Sarah.