Summary: Can I Refinance My Home Loan With Less Than 3% Buffer Rate?
| Details | Description |
|---|---|
| Customer | Lucas and Julie Hague |
| Broker | Jenish Manandhar |
| Purpose | To refinance investment property and owner-occupied property |
| Loan Amount | Investment property: $483,600 Owner-occupied property: $819,200 |
| Security | $1,025,000 (Investment property) $630,000 (Owner-occupied property) |
| LVR (Term) | Investment property: 76.76% Owner-occupied: 79.92% |
| Interest Rate | Owner-occupied: 6.29%, 30 years Investment: 6.44%, 30 years |
| Income | $80,739 (MA) + $136,700 (FA) |
Building A Secure Future
Lucas and Julie Hague work hard to support their family. Lucas is a full-time spray painter, and Julie is a part-time nurse. They’ve built a good life, but their home and investment loans could be better.
Lucas and Julie want to refinance their loans to get lower interest rates. This would save them money each month and allow them to borrow more if needed.
They’re looking for a lender with flexible options who understands their situation. Refinancing would free up money for their kids’ education, fun family experiences, and unexpected costs.
The Buffer Barrier
Lucas’ annual salary of $80,739 and Julie’s nursing income of $136,700 from two part-time jobs made them appear financially stable. Adding their $36,400 yearly rental income, they felt confident about securing a better interest rate. Their loan-to-value ratio (LVR) was below 80% for both loans, and they had a spotless credit history with no missed payments in the last year. Everything seemed to be in their favour.
However, they encountered a common hurdle: The 3-percentage-point serviceability buffer applied by many lenders. This buffer assesses a borrower’s ability to manage repayments by factoring in a hypothetical 3-point increase in interest rates. With this buffer in place, Lucas’ borrowing capacity was capped between $900,000 and $1 million. This restriction limited their refinancing goals and left them feeling frustrated.
Innovative Solutions
The 3-point serviceability buffer threatened to stall Lucas and Julie Hague’s refinancing dreams. However, Home Loan Experts’ mortgage broker, Jenish Manandhar, stepped in with a keen eye and a solution.
After a thorough assessment of Lucas and Julie’s situation, Jenish identified lenders offering a borrower-friendly 1-point buffer. While the criteria were strict, the Hagues’ strong financial standing – an LVR below 80%, loans older than 12 months, and a clean credit history – made them perfect candidates. Jenish’s expertise in staying updated with lender policies and his extensive lender network unlocked this valuable option.
With the 1-point buffer rate option, the Hagues’ borrowing power skyrocketed from between $900k and $1 million to a staggering $1.4 million. For their investment property valued at $483,600, their loan rate fell from 7% to 6.44%, saving them $73,800. Similarly, for their owner-occupied property valued at $819,200, their loan rate decreased from 6.44% to 6.29%, resulting in $77,760 in savings over the loan term. To further improve cash flow, Jenish recommended extending the loan term from 26 to 30 years.
Thanks to Jenish’s innovative approach, the Hagues successfully refinanced, achieving financial stability, more investment opportunities, and the peace of mind of a secure future.
Do You Want To Refinance With A Lower Buffer Rate?
Our experienced brokers understand the complexities of refinancing and can help you achieve your financial goals. We’ll guide you through the process, ensuring you get the best possible loan options.
Call us on 1300 889 743 or complete our free online assessment form. Let’s explore your possibilities together.
