Westpac recently launched its Streamlined Refinance policy to help customers.
What Is Westpac’s Streamlined Refinance Policy?
This new policy is designed to make refinancing easier and more accessible to customers who meet certain eligibility criteria, so they do not end up as mortgage prisoners.
Applications to refinance a mortgage that meet the Streamlined Refinance policy criteria will continue to be assessed under standard serviceability and document verification requirements.
However, if a customer cannot meet the serviceability requirements under the standard assessment criteria, a modified Serviceability Assessment Rate may be applied as a credit exception to new and existing consumer mortgage commitments.
What’s A Serviceability Buffer?
Serviceability buffers, also referred to as assessment rates, are a key part of the lending process. They are used to calculate how much money a borrower can afford to repay each month. The buffer is usually set at a certain number of percentage points above the borrower’s current interest rate.
The buffer rate that Australian Prudential Regulation Authority (APRA) has set is 3 percentage points above the loan product rate. This is to ensure that the borrower can still afford to make repayments if interest rates rise in the future.
Am I Eligible For The Streamlined Refinance Policy?
To be eligible for Westpac’s Streamlined Refinance Policy:
- The new loan must not exceed $50,000 above the loan being refinanced.
- The refinancing must lower your interest rate and monthly repayment.
- The new monthly mortgage repayment (without the buffer) must be equal to or lower than the current minimum monthly repayment amount specified in your loan contract.
- Your credit score must be equal to or more than 650.
- Only principal and interest (P&I) repayments are accepted
- You must confirm that you do not anticipate any adverse changes that affect your capacity to repay the loan.
- You cannot have any arrears or hardship reported in the last 12 months
- In the last 12 months, all open liabilities on your credit report must have zero reported missed payments. Exceptions can be made for pending and not reported accounts.
- The mortgage being refinanced must be open for at least 12 months and must demonstrate good payment history.
- You must demonstrate good repayment history if you have other financial commitments like credit cards, personal loans or car loans.
Home Loan Experts’ Take On This
Home Loan Experts Mortgage Broker Sheng Ye explained, “This offer may be a good option for individuals who are potentially facing a mortgage cliff, as long as they have maintained a good payment history and credit rating up to this point, and the refinancing would result in a lower interest rate and monthly repayment.”
Will Other Lenders Follow?
Ye further comments, “It remains to be seen whether other banks will adopt similar offers. CBA and NAB have recently ended their cashback offers and are pulling back from refinancing. ANZ may be more likely to offer a similar deal, as they are still offering to refinance deals to gain greater market share.”
Let Us Help You
Navigating the stringent lending criteria to refinance to Westpac can be challenging. Take the help of an expert mortgage broker at Home Loan Experts. We can help you understand the criteria, compare other loan options and help you refinance. Call us on 1300 889 743 or complete our free assessment form today.