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refinance timing and costs

Discussion in 'Real Estate' started by voigtstr, 3rd Apr, 2007.

  1. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    we bought for 180k
    we owe 169.5k
    unit is worth (we think) 190k (we'll get a valuation next year in feb (2 year anniversary))

    how much equity would people generally wait for before refinancing (too withdraw the equity), and apart from increased interest costs, are there any other fees for refinancing?

    Cheers
    Simon
    aka the voigtstr
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Depends on how you do the refinance as to what fees you will pay.

    There will potentially be some mortgage stamp duty (either on the increased amount of the loan, or on the entire amount if you change lenders) - and possibly a refinance fee or loan application fee for a new loan.

    I know a few people who try and refinance every 12 months - but I find that that's often a bit too soon ... so I typically wait 18 - 24 months. Depends on how much growth you've had and how keen you are to access the equity.

    If you're only talking about $10K worth - I wouldn't bother myself ... but that's entirely up to you.

    Talk to your mortgage broker (or bank) to find out exactly how much it will cost you to refinance and do a cost-benefit analysis.
     
  3. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi Simon

    In your scenario, I don't think the exercise to refinance would be worthwhile at this stage as you haven't built up enough equity. Keep in mind that you can usually only borrow 80% of the new value minus the current borrowings against the property so this effectively equates to 80% of $190K( $152K). You need to talk to your lender or broker about your options of course.