Is it Time to Refinance Your Keystart Home Loan?
Keystart Home Loans have been a great option for low-income Western Australians with little deposit to get into their own home when conventional lenders could not help. Whilst a good way to get a kick start into the property market, the borrower’s goal should always be to pay it down efficiently and ultimately refinance to a regular lender.
Why refinance from Keystart
Keystart home loans are generally more expensive than conventional lending institutions. Presently you can expect to be paying in the vicinity of 1% more on a Keystart loan than a regular bank. On a loan of $300,000 this equates to about $200 per month in interest savings.
In addition, Keystart loans do not have features like offset accounts and the ability to package your banking products to save money. Therefore you are likely to save money by refinancing to a more cost effective product as well as making your banking much easier and more efficient.
When can I refinance my Keystart loan?
This is key. Ideally you will want to look at refinancing once you have a Loan to Value Ratio of 80% or less, that is, your loan is no more than 80% of the value of the property. This will ensure you will avoid Lender’s Mortgage Insurance. That being said it still may be cost effective to refinance if mortgage insurance is payable, but your broker will be able to weigh up the numbers for you.
If you have taken advantage of Keystart’s Shared Equity scheme then the Housing Authority will have 20% ownership of your property. You can still refinance your loan provided you have the income to support the extra debt needed to pay out the Housing Authority and there is enough equity in the property to do so.
Your mortgage broker can order a valuation to confirm your equity position prior to lodging an application.
How can I refinance my Keystart loan?
Meeting with a broker should be your first priority. They will be able to run through what your alternate lending options may be as well as the potential savings you will enjoy and what exactly is involved. Your broker will also navigate you through the paperwork involved and ensure it’s a smooth and seamless process.
Depending on the lender you are looking at refinancing to, there may also be scope to order and upfront valuation to get an accurate security position
Who can I refinance my Keystart loan to?
Your mortgage broker will be able to advise what your options are based on your current circumstances. But assuming your income qualifies and your equity position is sound you will be able to refinance to any lender whose policies you satisfy.
So, what’s next? A quick call to one of our brokers will be able to give you an idea of your position and if you qualify to refinance to a cheaper rate. There is nothing noble in paying more on your home loan than you have to, so maybe it’s time to look at what better options are out there to help you save on your home loan .