MAINTAINING A HOME
How much equity do I need to refinance a mortgage?
5 October 2020
Here’s a good starting point towards answering this question: find out if the amount of your new loan will be under 80% of the value of the property. That way you can avoid paying mortgage insurance.
Mortgage insurance is a one-off cost that’s added to a mortgage when the loan amount is more than 80% of the property’s value (lenders call this your “Loan to Value Ratio” or “LVR”).
The amount of equity needed when refinancing may vary between lenders and loan types, so talk to your lender for more specifics about what could be right for you.
Some good news: you may have more equity than you think
If the value of your home has appreciated, it could mean your LVR is under the 80% threshold.
Talk to a local real estate professional to get an expert valuation. Banks will generally need a valuation as well when reviewing your refinancing application.
If you already have a good sense of your home’s current value, try using Suncorp’s Refinance Calculator to see what kind of refinancing savings you might be able to get.
Plus, you could receive a cash bonus up to $3,000 when you refinance to an eligible Suncorp Bank home loan.*
Refinancing is a numbers game, so be sure to look at all the costs
We spoke to Cameron Selwood, a Senior Lending Manager at Suncorp Bank’s Carindale store.
Cameron advises potential home refinancers to, “compare all the costs…the costs to leave your current home lender, any Government costs and any set up costs with Suncorp Bank.
“In addition to these costs, we look at what interest customers would pay over their current remaining loan period compared to the interest they’ll pay coming to Suncorp Bank.
“If the customer isn’t coming out ahead, we’ll make sure they understand this. If they choose to proceed anyway, we’ll work with them to help ensure they’re making the best possible decision. Sometimes people have reasons for wanting to change lenders, but the last thing we want to do is put someone in a worse situation.”
If the sums work, refinancing costs can be financed too
Cameron also looks at whether the customer can come out ahead, even if they’re not able to cover the costs of refinancing up front.
If the numbers add up to the customer’s benefit, these costs may be able to be added to the new mortgage.
“For example, the other bank may charge a $300 home loan exit fee and the Government may charge $390 in fees. That extra $690 could be added to the loan.” So you don’t necessarily need to dip into your savings in order to start saving on your home loan every month.
Ready to take the next step?
To find out more about whether you could save through home loan refinancing, talk to one of of Suncorp Bank’s home lending specialists. Request an obligation-free consultation to find out whether refinancing could be right for you.
Cameron Selwood is Lending Manager at Suncorp Bank's Carindale, Queensland store. He has more than 17 year of home lending experience and he's passionate about helping customers achieve their home ownership dreams.
- How to successfully refinance your home loan
- When is the best time to consider refinancing your home loan
- How much does it cost to refinance your home loan
*Receive a $2,000 Refinance Cash Bonus where the total refinanced amount to Suncorp Bank is between $250,000 - $749,999.99 & LVR of <= 90%. Receive a $3,000 Refinance Cash Bonus where the total refinanced amount to Suncorp Bank exceeds $750,000 & LVR of <= 90%. The Refinance Cash Bonus Offer is only available when you are approved for and settle an Eligible Home Loan with Suncorp Bank which must also meet the following criteria: (1) Pre-approvals must be fully approved before 18 December 2020 (2) cannot be a refinance of an existing Suncorp Bank home loan; (3) where total refinance amount to Suncorp Bank is (i) between of $250,000 – $749,999.99, a payment of $2,000 will be made to the borrower; or (ii) where the total refinance amount exceeds $750,000, a payment of $3,000 will be made to the borrower. Limit of one payment per borrower regardless of the number applications which may be eligible. If there is more than one individual borrower, only one payment will be made to them jointly. The customer must hold a Suncorp transaction account held in the name of all borrowers to be eligible for the offer, if one is not held, one will be opened with payment credited within 60 days of the settlement date. Suncorp Bank reserves the right to vary or withdraw the Cash Bonus at any time. Applications subject to credit approval. Fees, and charges may be applicable. Full terms and conditions will be included in our loan offer. Depending on your financial circumstances, you should obtain independent advice before making any decisions regarding the Cash Bonus.
Home Loans and Personal Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Fees, charges, terms and conditions apply and are available on request. Please read the relevant Product Information Document before making any decision about a product. Contact us for a copy.
The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries
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