ARCHIVED REFINANCING
| Stamp duty confusion |
 I'm considering switching lenders for my principal residence. The mortgage amount and names will remain the same, !!d like to know what stamp duty fees will be charged. The broker I was originally dealing with told me to expect to pay anywhere between $5 and $1,500. The Office of State Revenue (OSR) said I'd be liable for $1500. However a lawyer then advised I'd have to pay $1,500 "but could claim it back" later on a refund basis from the OSR.
The bank has agreed to a mortgage transfer - not a discharge - subject to the approval of the new lending institution (hence the $5 possibility). At $5 I'd proceed; at $1s500 it isn't worthwhile. Can you advise me on how much I'll have to pay? |
 My understanding is that you only have to pay stamp duty on a mortgage once, provided that when you refinance the borrowing entity/ies remain the same. When you refinance, if you increase your loan, you will have to pay stamp duty on the portion of the loan that is new. Your lawyer's advice is correct in that in most instances the new lender will reguire the mortgage to be stamped for the full amount, but you can then claim back from the Office of State Revenue the portion that relates to the existing 'refinance' amount.
The OSR in your respective state should be able to provide you with more specific information on this. Most lenders have their own legally drafted mortgage documents so ! would be very surprised if any new lender would be happy to accept a transfer of the existing mortgage.
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Undervalued |
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I recently refinanced and received a property valuation that was well below a previous valuation I had six months earlier. This meant that mortgage insurance was payable. When I asked the lender if I could have a second opinion they said no. Was I entitled to a second opinion? |
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Each lender contracts the valuations of its borrowing clients out to a panel of trusted valuers. As a borrower, you may only use a valuer if it's accredited with your lender. However, even if your lender has several valuers on its panel, you may not be entitled to choose between them, or have a 'second opinion' carried out.
Most lenders allocate valuation jobs to valuers on a postcode basis, with each valuer taking responsibility for a unique set of postcodes. Check with your lender to see if there's more than one valuer allocated to your postcode, in which case you may be able to request a second opinion - although you'll probably have to foot the bill for it, (average around $250). In my experience it is pretty rare for residential valuers to get it wrong.
Given current market conditions, the value of the property may well have decreased. If this is the case, you might instead ask yourself whether it was the right time to refinance.
In the current market, it may be an idea to ask that a valuation be completed before you proceed too far down the refinance path. |
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Refinance to Fund Home Improvements |
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Can I refinance my home and roll-in my credit cards and a personal loan PLUS access funds to build on a garage (subjected to financial evaluation)? |
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One of the very best ways to improve cash flow is to combine your existing loans into a lower interest rate home loan with one easy payment. Your payments can be substantially reduced. If however you elected to continue payments at your |
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current levels, your loan could be paid off much quicker and you would save on interest. And yes, subject to satisfactory loan assessement, it is possible to also provide other additional funds for other purposes. Go for it and best wishes.
From YMM February 2007 |
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Stamp duty |
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I am looking to switch lenders for my principal residence. The mortgage amount and names shall remain unchanged, and I would like to know what fees regarding stamp duty I will be up for when I switch lenders. What is the bottom line regarding stamp duty that I will have to pay? |
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My understanding is that you only have to pay stamp duty on the mortgage once, and that you won't have to pay it again on the money you are refinancing (provided the borrower remain the same). |
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If you increase your loan, you will only have to pay stamp duty on the portion of the loan that is new. Having said this, I do know that some lenders require you to pay stamp duty on the whole amount you are transferring, and you then claim it back after you have refinanced. The OSR in your respective state should be able to provide you with more specific information on how to go about this.
From YMM March 2007 |
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MORTGAGE INSURANCE |
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I purchased a property 18 months ago for $475,000 and borrowed $450,000 to pay for it. I consequently had to pay approximately $10,000 in mortgage insurance. If I were to change my home loan from my current lender to a new leander in a different bank, would I have to |
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pay mortgage insurance again? |
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Generally speaking, mortgage insurance is not portable if you refinance to a different lender. For each new loan a lender writes, it looks at the loan to valuation ratio (LVR) to assess whether lenders' mortgage insurance (LMI) is required. |
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When you took out your loan 18 months ago, your LVR was 95%. Your lender required you to take out LMI because your LVR exceeded 80%. Whether you would be charged LMI now depends on how much equity you have built up in the property over the past 18 months. If you were on an interest-only loan, you would not have repaid any of the principal (and thus your equity may still only be 5% unless there has been a significant increase in the value of your
property), but you may well have paid off a decent chunk on a principal and interest loan.
Depending on which mortgage insurer you are with, you may be entitled to a partial refund on your existing LMI policy. Some insurers refund borrowers who refinance within 12 months, but others allow refunds for those switching after 24 months, so check with your mortgage insurer. In short, you'll need to do your sums to determine how much equity you now have in your home and what your LVR will be if you decide to switch - on that basis, you can determine whether you will need LMI.
From YMM June 2006 |
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Mortgage Brokers v Mortgage Managers |
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I'm in the process of refinancing my home loan. I've spoken to a couple of brokers and mortgage managers. What's the difference between the two and who will deliver the best home loan? |
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In brief, a mortgage broker is someone who sources funds from a panel of about 30 or so lenders. This does not represent every lender in the market, merely the ones with whom they are accredited and have commission agreements in place. |
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The broker packages your loan application and submits it to the lender forapproval. Once your loan has settled, the broker has little more to do with it. Your on-going relationship is with the lender. As a general rule a broker will recieve a once-only upfront fee from the lender on settlement of your loan and an on-going 'trail' income (on average 0.20% p.a) until the loan is repaid in full.
A mortgage manager, or non-bank lender, sources funds from those Australian finance wholesalers who do not have a retail presence in the market. Non-bank lenders can offer more competitive rates because they specialise in mortgages, they are not subsidising less profitable businesses and they do not have high overheads of bank branch networks. As the name suggests, mortgage managers do just that, they process your loan application through to approval and settlement, and then manage it until such time as the loan is repaid in full.
The mortgage manager receives an upfront fee for their processing of the loan and an on-going management fee for their 'retail' role. The mortgage manager has a long-standing relationship with you - should you have any queries about your account or wish to vary your mortgage, the manager is your point of contact.
You should do your own research and even check with family and friends to see who they have used. There are a number of websites available where you can compare loans and providers to find one that best suits your needs.
From YMM May 2007 |
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