Streamline Refinances: Which Lenders Are Doing What?
Rael, who recently travelled to the USA and Canada, found that the current interest rate rises are impacting many across the globe. Many are suffering from the same mortgage stress affecting many Australians.
On a more positive note:
Given the challenges faced when rates start rising, a refinance to a lower rate can be the solution. Some lenders have released new servicing policies that have been designed to help Australians who are unable to meet the current standard serviceability requirements for a home loan. Under the new policies, lenders can consider an application for a refinance if you can demonstrate the ability to repay your loan.
How does this work?
The current interest rate buffer is 3%, but some lenders, under the new policy, are using an interest rate buffer of 1%. What this means is that if the lender’s current variable rate is 6%, you must be able to demonstrate the ability to make repayments on your loan at a rate of 7% (9% under normal lending criteria, however this varies depending on the lender).
There are some requirements to be met to be eligible for the new servicing policy. These requirements include, but are not limited to:
Loan-to-Value Ratio (LVR) of 80% or lower
Demonstration of a reliable source of income
Ability to make loan repayments at an interest rate 1% above the current variable rate
Clean credit history
* The above is a short summary of the criteria, please reach out to the team to assess if you are eligible. Each lender has very different requirements to be met.*
