Refinancing your Keystart loan
Keystart Home Loans have been a great option in assisting low income Western Australians with little deposit in getting into the property market. Whilst it’s a good product to help get that kick start that is often needed, the goal should always be to pay it down efficiently and ultimately refinance to a regular lender.
So why should you work towards refinancing from Keystart and how do you go about doing that? Here, we breakdown the nuts and bolts of why and how it can be done.
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.
Furthermore with a Keystart loan you do not have the benefit of features like an offset account and the ability to package your banking products save money. So not only are you likely to save money by refinancing but also make your banking much easier and more efficient.
Exit fees for KeyStart Loans?
In refinancing your Keystart loan you can expect some exit fees to be applicable. To find out the exact amount you need to refinance you can simply call Keystart and request a “Payout Figure”. This amount will include both the outstanding loan amount along with the relevant fees associated. You can then work with your broker to determine if a refinance to another lender is going to be more cost effective, but assuming you have a loan to value ration less than 80% its safe to say it most probably will be.
When Can I Refinance?
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.
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.
How Can I Refinance?
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 To?
You 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 if you are in a position to look at a refinance to a better 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 available to you.
Call us on +61 8 9429 5794 and ask to speak to Paul Prindiville, Mortgage Broking Team Leader, or complete the enquiry form below.