Why Aren't You Refinancing Your Variable Rate Home Loan?

brawndo on 14/09/2021 - 14:50
Last edited 14/09/2021 - 15:03

I have to admit my reason is I've been lazy and just never thought about it.

But I just had a quick look at variable home loan rates and found that I've been paying about 35 basis points (0.35%) more than what's on offer in the market at the moment.

As an example, in about 10 minutes of research I have found the following:-

HSBC - Variable 2.19% (70% LVR) - $3288 cashback after 60 days
Athena - Variable 1.99% (60% LVR)
Macquarie - Variable 2.14% (60% LVR)
Loans.com.au - Variable 1.85% (70% LVR)

I realise not everyone would be eligible for these rates, but it's hard to believe that everyone will be on the best rate for their situation.

So curious to know, why aren't you refinancing your variable rate home loan?

Financial Home Loan

Comments

  • Richfield on 14/09/2021 - 14:57
    +3

    35 basis points (0.0035%)

    That’s 0.35%

    • brawndo on 14/09/2021 - 15:03

      That's even better!!

      Have updated, thanks.

  • GG57 on 14/09/2021 - 15:11
    +5

    You need to factor in the refinancing costs, such as the new mortgage registration / de-register the existing mortgage, other fees, etc.

    • Almost Banned on 14/09/2021 - 16:34

      While the financial institution you are leaving may charge you some costs, entities like Athena charge you no costs to come to them.

  • JTTheMan on 14/09/2021 - 15:30
    +10

    The main reason is the absolute headache from the endless paperwork required!

  • gimli on 14/09/2021 - 15:53
    +6

    For those who are too lazy to refinance, call up your bank and check what the best rates they can offer are. (Depending on wait time for call) you can have rates lowered in 10min.

    Did this with CBA. It did mean i would be locked in for 12 months. (Can't refinance for 12 months after that). Was not the best rates on the market but definitely huge improvement on my current rates.

    • brawndo on 14/09/2021 - 16:53
      +1

      Did you move to a fixed rate with CBA?

      • gimli on 14/09/2021 - 17:25

        changed to variable with CBA but got a quote for split loan last week. Can't offset a fixed loan. So have variable bit mainly for offset purposes
        (Its an investment loan so rates may not be meaning full to you but i will post when i find the paper i wrote it on)

        Just call and see what the bank can do.

  • TheMindsetTraveller on 14/09/2021 - 15:58
    +5

    The quickest way to get a rate cut is to talk to your existing lender and start throwing ideas to them you are comparing rates and might leave. Some might throw you a rate cut to stay around.

    • Brumby92 on 14/09/2021 - 21:29

      It's worth a try!

    • fenikkusu on 15/09/2021 - 07:55

      Worth a try, but doesn’t always work. I was staff and didn’t get anything and ended up refinancing. Even with all the costs involved I was better off switching.

      I heard ME bank has $3k cashback per application ;)

  • burningrage on 14/09/2021 - 16:43
    +3

    Paperwork, legacy perks (eg: Interest only on own occupier), credit rating. However mostly because of Responsible Lending law, I must sacrifice credit cards just in order to get the same or even less amount of loan because the Govt suddenly thinks "I can't afford it".

    That's why.

    • brawndo on 14/09/2021 - 16:51

      All valid points. As for credit cards, you don't churn for rewards point bonuses normally?

      • burningrage on 14/09/2021 - 20:53
        +1

        No. Not at all.

        The financial scrutiny is not something that I look forward I must admit.

  • rektrading on 14/09/2021 - 16:56

    So curious to know, why aren't you refinancing your variable rate home loan?

    Because we get +19% on our savings.

    • brawndo on 14/09/2021 - 17:04

      How does that work?

      • gimli on 14/09/2021 - 17:26

        Doge coin maybe?

        • brawndo on 14/09/2021 - 18:05

          The username would checkout

  • bmxr on 14/09/2021 - 17:14
    +2

    If you are lazy, refinance with the same bank. We did and were offered 1.79% (80% LVR) fixed for 2 years - compared to the 2.97% variable we were on - and it was literally two 5 minute phone calls to initiate and 5 minutes of filling in a form. Saved us a small fortune over the 2 years for maybe 15 minutes of time!

    • denserham on 14/09/2021 - 20:44

      what bank?

      • bmxr on 14/09/2021 - 20:50

        CBA

    • brawndo on 14/09/2021 - 21:34

      That's quite an amazing rate, well done.

  • JIMB0 on 14/09/2021 - 17:37

    Because they have a minimum for the cashback bonus.

    • brawndo on 14/09/2021 - 19:31

      Just checked the HSBC minimum loan size is $250k. I suppose if you're lucky enough to have a loan size less than that, interest rates don't matter as much either.

  • upended on 14/09/2021 - 17:44

    For me, I prefer to refinance with my current bank, and I have been successful almost every time I have asked. For starters, we went straight to the bank (did not have a great experience with the broker) and the lending manager we spoke to (approximately 14 years ago) helped us secure our home loan. He still works there and has been great so far. I have a great working relationship with him and have secured a significant discount on the variable rate over time.

  • cuckchump on 14/09/2021 - 20:58
    +1

    refinance only applies if u got a significant mortgage… would they refinance someone who still owes like 20-50k on their loan? :(

    • brawndo on 14/09/2021 - 21:30

      I believe you can always draw out some of the equity when refinancing and leave it in an offset if available i.e the new loan doesn't have to match the old loan.

      It's also a way to have access to cheaper finance than say a credit card.

  • Brumby92 on 14/09/2021 - 21:30
    +1

    I bought my house for 110k. Going from 3% to 2% will cost me $3000 roughly, which is like 5 years to break even. Most banks won't touch you if you have a loan less than 150k I've found.

    • brawndo on 14/09/2021 - 21:34
      +1

      I'm just amazed that you were able to purchase a house for 110k

      • Tommyaka on 15/09/2021 - 07:54
        +1

        I'm not. It's either a house in the bush, or it's a shoe box.

        • El-Rhi on 15/09/2021 - 08:05
          +1

          Or purchased in 1995

  • MeesusEff on 15/09/2021 - 00:25

    Wasnt sure when I was going to sell the house and didn't want to be hit with the minimum term fee.

    • Tommyaka on 15/09/2021 - 07:55
      +1

      I've never had an early termination clause for my variable rate home loans.

  • terrys on 15/09/2021 - 09:09

    I'm too busy not beating my wife.

    terrys on 15/09/2021 - 09:09 (Collapsed - Offtopic. Show)
  • Brianqpr on 15/09/2021 - 09:45
    +1

    I work for my lender so get a reasonable staff deal and no fees at all. Recently borrowed a bit extra to do some renovations and was one year into a 3 year fixed rate at 2.29%. Almost didn't bother asking about breaking and re-fixing as I assumed the break cost would be too high. Turned out they only charged me about $300 and I'm now fixed at 1.86%, will save over $9k in interest over 3 years when compared with the old rate. Essentially the reno costs pay for themselves, at least for that period.

    There's a lot of competition in the lending market currently, so now is as good a time as ever to either consider refinancing or to push your current lender for a better deal.

  • moar bargains on 15/09/2021 - 12:12
    +1

    I'm literally completing the refi paperwork now, but ended up going with a 2 year fixed rate. First time fixed, so we'll see how it goes. I do prefer the idea of an offset account and was thiiiis close to going variable with loans.com.au, but the fixed rate with cashback was going to come out slightly ahead over 2 years (assuming no raising of variable rates).

  • Jugganautx on 15/09/2021 - 14:07
    +1

    Because it literally takes months to accomplish and can be a major pita depending on banks.

    Ymmv

    • brawndo on 15/09/2021 - 18:41

      I think that's the biggest concern. However, savings can be substantial i.e in the thousands per year, and I'm sure I've jumped through more hoops to save a few dollars on certain ozbargain deals in the past.

  • Refinancerloans on 16/09/2021 - 17:06

    We are finding that around 85% of our clients are wanting to fix their loans right now. Refinancing has made the lenders re think their strategy.

    • They are offering around a 40 - 50 basis point discount to have the certainty of fixed business. For example 1.79% fixed vs 2.4% variable.
    • With the RBA at pretty much zero and property going nuts, it's looking unlikely rates could go much lower

    If you don't plan on selling for 2 years it seems least risky to fix and have a smaller variable split to offset :)

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