We’re in the process of refinancing our 5 yr fixed investment loan with another provider. They have undervalued our own property by $40,000( which is unencumbered but used as security for the loan)and this has subsequently brought our LVR up to 83%.Does anyone have any tips as to how to avoid placing another property as security( and hence overcapitalising) and still avoiding mortgage insurance. Our broker is suggesting we give up the other property as security but this would mean that all our properties will be secured which would be detrimental to our future investing plans.We are reluctant to do this but would really like to refinance with this current lender
CheersI had this recently. We switched to another lender who’s valuer “found” another $60K iot win the deal.
I can only suggest you ask your broker for a lender with a compliant valuer. He should have one he uses for these cases.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
It would also help if you made a list (to give to the valuer when he comes to value the property) of comparable properties which recently have been sold.
Unfortunately the details a valuer collects is probably about two months old so go and do the rounds of the local agents to ask them whether they know of any comparable properties which have been sold recently as the valuer may possibly miss out on these details.
Pisces
Firstly, why are you refinancing? Break costs on fixed interest will be huge, and savings will be nowhere near what you are told.
Secondly, well done by borrowing all on the ip, and bugger all on the ppor. Very intellegint.
Ring your current bank up and ask them for a list of valuers on their panel. It is useless to get a valuation done by someone they wont accept. They probably have 3 or 4 valuers. Choose them one by one, show them all of the wonderful things you have done it, throw in a few lines of recent sales, and you should get a decent valuation.
Total cost in terms of time, effort and money-bugger all. Time an hour off work, effort -minimal, not much stresse, and money about 230 dollars.
I was under the impression that banks will lend to a lvr of 70-80% with minimal hassles. Talk to the person in charge, not the checkout chick at the teller
I have to agree with Mortgage Hunter on this.
A new bank is competing for your business and hence more likely to come up with the goods on the val as opposed to your existing bank which already has the security and doesn’t need to increase their exposure.
Also, some Lenders are known to absorb the Mortgage Insurance premium up to 85% depending on how much they value your business.
Have another word to your Broker.
Chris Rathgen
Mortgage BrokerMortgage Hunter, do you mind if i link too your site, from my site?
>>Firstly, why are you refinancing? Break costs on fixed interest will be huge, and savings will be nowhere near what you are told.<<
Wrappack, I think that what you said about the breakcosts is incorrect.
Presumably the fixed rate loan was taken out before the recent increase in rates.
Therefore the present fixed loan rate would likely be higher than the rate which is presently in place for this loan.
Therefore the bank’s economic loss caused by someone repaying a loan is non-existent (as far as the bank no longer being able to obtain the same rate again is concerned).
So I doubt that there will be a huge early repayment penalty to pay, if any.
Perhaps Stingray can tell us what his bank is talking about in this regard ?
Secondly, your suggestion, Wrappack, about the borrower arranging the valuation may not be as helpful as many lenders will not accept a valuation unless they have actually ordered it !!
Pisces
The break costs are around $5000 and our broker has agrred to pay $2000 which we have in writing. Our savings with the new rate will be around $4000/year. So we will definetely be better off by refinancing
Hi Stingray,
I encountered this problem about three years ago with one of the major lenders – they came in with a very low valuation that put me at about 85% lend for the next purchase. When I argued with them about the valuation, they said that that was how they did it, that they valued the property on what it would be worth to sell RIGHT NOW. So I went to another bank, offered them all of my lending and in exchange got a decent valuation, better interest rate, and the refinancing I wanted. The break cost for the first bank was huge – 7K, but the benefits over the next two years caught that up, and more. I say see what better offers you can get from other banks – direct or through your broker, and move on. If your current bank can’t get on the same page with your strategy today, what will they be like the next time you want to take something to them, especially if your next move is more creative and they continue to be conservative. Move on !!
Cheers
Lisa RCastleDreamer
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