In this article I will cover an example of the steps required to complete a refinance for a property investor couple who wish to make a saving on interest rates.
Our clients, Mr and Mrs EarlyRetiree (ER) have rung their existing big four bank and been told the rate they have now is the best available. The ER’s are pretty switched on and know that the Loan to Valuation ratio on their investment properties has improved over the years. The bank officer on the phone is not able to see this information and as such does not offer the ER’s a discount. The ER’s decide to contact a mortgage broker with investment property experience.
First a picture of the borrowers is required. Mr ER is 53 working full time, Mrs ER is also over 50 and working part time. They have one teenager left at home. They have 10 properties in the portfolio spread over multiple lenders.
The loan they have is variable and in splits, one split for each investment property. The new loan should offer the same facility. After many years of using fixed loans our investors are ready to experiment with variable rates. But they want to be able to rapidly switch to fixed. Experience shows that Interest rates may just as well rise as fall, if they keep falling all good, but when they turn a quick move to fixed is required. The ER's can release one of the securities due to capital growth so only three properties are to be refinanced the combined LVR to be 65%.
There are more questions a broker will need answered but for now we can beging to work our way through the refinance. The best place to start is with interest rates as the rate has to be better than what the ER's have now.