Forums / Getting Technical / Finance / Refinancing with no current job

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  • Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 205

    Hi everyone,

    One of my properties has 50% LVR due to property growth.

    I am currently on career break and have not been in work for 4 months now but been comfortably repaying the interest. My property is also leased for 2 years.

    Can I refinance back to 80% LVR or even just refinance to a lower rate at the same LVR with another bank?

    Am i effectively locked into this higher rate until I find a job?

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 963

    Unless you have substantial income elsewhere it is doubtful. Lenders are required by law to look at your overall financial situation and stress test any debts etc. This means that before even considering what your existing IP mortgage is – they will plonk living expenses of $24,000+ p.a they will want to see covered, only take 80% or less of the rent you receive, stress test the mortgage repayments of your mortgage by more than double etc.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 15,850

    A straight forward no!

    Without the ability to pay the loan back it would be a breach of the nccp act for a lender to lender you money.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://www.terryw.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Operating Remotely)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,937

    Without the ability to pay the loan back it would be a breach of the nccp act for a lender to lender you money.

    Not quite correct as NCCP only applied where the term of the loan is more than 62 days.

    We do a lot of short term private loans where the borrower has a clear exit strategy but on paper does not appear to have sufficient income to service a traditional loan.

    Cheers

    Yours in Finance

    Richard Taylor | Helping investors pay down their debts thru a Mortgage Trust investment
    http://www.australiansecurecapital.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $26M. Ask me for a copy of my API Interview.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,042

    Can I refinance back to 80% LVR or even just refinance to a lower rate at the same LVR with another bank?

    Hiya

    Probably not with a mainstream lenders unless you are deriving a lot of income from other sources.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: info@passgo.com.au

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 205

    So you saying banks have existing default clauses requiring you to pay back the loan if your financial situation changes post loan funding even if you are meeting interest payments? Or for resi loans once the moneys lent as long as interest it paid its all fine even if the borrowers financial situation changes

    I know commercial loans have quarterly interest coverage covenants etc but I can’t see monitoring clauses in big 4 funded loans

    • This reply was modified 2 weeks, 6 days ago by Profile photo of propertyboy propertyboy.
    • This reply was modified 2 weeks, 6 days ago by Profile photo of propertyboy propertyboy.
    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 335

    2 major boxes need to be ticked;

    1. Security – being at 50% you are sweet there

    2. Income – you will need to demonstrate income above and beyond all outgoings including living expenses which will leave you with surplus income that would need to cover the repayments at between 7-8% inmost cases.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: crice@cdrfinance.com.au

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