Switching your loan is a great way to make changes to your financial security, your budget, and your overall goals. What is switching? It's the buzzword the banks use to describe the 'process' of changing your loan rate, product, or features during the course of the loan. Below are some real life switching examples that we have assisted people with


Switching from Principle & Interest, to Interest Only
Many of our clients upgrade their housing to a new home but keep their existing as an investment. In this scenario, we often, with the advice of an accountant, opt to switch the home loan into an interest only feature for between 1 to 5 years. This is the most common reason to switch. People experiencing short term cash flow issues may opt to switch their home loan into interest only for a year until the budget pressures are off. This might happen when you have a new child and maternity/paternity leave is taken, for instance.

Switching from Interest Only, to Principle & Interest
Sometimes you may wish to re-align your financial goals. If times are good and cash flow is strong and steady, why not start to hammer some of the principle off your investment loans? We have a great range of calculators here on our website that will help you work out what repayments will meet your target. Click here for our calculators.

Switching from Standard Variable to Fixed 
Thinking of locking your interest rate in? Most banks have a 1,2,3,4 and 5 year fixed option to help you and your family budget for repayments. With fixed rates being at record lows, many of our clients are considering a switch to fixed. If you're not sure you can always opt to split your loan into part fixed and part variable so as to hedge your bets a little both ways.

Switching from Standard Variable to a Basic Home Loan
Loans that are a little older tend to be on less competitive rates, when people ring us we sometimes simply discuss the option to switch into their current lenders basic home loan which will mean a cheaper rate, but less features. We can discuss whether or not there is a benefit and what features are important before you opt to do so.

Switching a line of credit into a standard home loan
So many people have lines of credit that are maxed out and no longer being paid off, perhaps it's time to switch to an amortising home loan that you can pay down over the next 25-30 years. They tend to hang around indefinitely if you don't.

It is not always necessary to refinance for a better option. If you're not sure about your home loan, feel free to contact us to have a review of your current rate, product options and to obtain assistance in switching. 

Australia is a big country and Australians love land. For so many of us, to own land, have land, harvest and use land is at the core of our sense of self. Not to mention, the sheer enjoyment of owning your space AND the views. 

Having worked as a mortgage broker in both Port Douglas and Bowral for ten years; 'acreage', 'rural zoning', 'dwelling entitlements' are words I hear and deal with regularly. Some lenders simply won't finance over five acres, or secure against rural zoning, so we really need to know our lenders policies. A recent case really highlighted this, and here is how we overcame it....
The land

An agent came to me experiencing difficulty in country NSW with a listing that wouldn't exchange due to the buyers having problems with lenders. The block was located outside part of a new development that was not close to any towns, so comparable sales were restricted. The clients had experienced difficulty in financing the blocks with not just one, but two local lenders, both of which had ended up declining the finance once the valuer sent their report in. This was not surprising, the zoning was rural, there were limited comparable sales, and the block was well over five acres. A trifecta of issues for most lenders, however, not insurmountable with the right lender and loan structure. 

The clients

The clients met with me to discuss a strategy. The blocks were clearly important to them and supported a dream to move and reside there happily, and  away from suburbia. We discussed the various hurdles lenders have and agreed on a strategy that met with their budget, covered all the fees, and fit well with cash flow. It was important that we took the equity out of their own home, so that the block could be purchased at 80% loan to value ratio or less, rather than financing it the other way around as many would do (load the debt more heavily against the property that was not their home). The strategy thus far was to:

1) Use a lender that was comfortable with large acreage's and rural zoning
2) Secure the debt at 80% LVR by using additional equity from the clients home
3) Finance some equipment required within the clients 'dream outcome', with equipment finance rather than equity so as to keep the LVR at 80%, rates low, fees low, and avoid discomfort from a mortgage insurer

Things got a little trickier...

In getting the application ready, and researching options, I uncovered that the blocks size would not allow for a dwelling entitlement within the local council's development control plans. Even a lender that accepts rural and larger blocks would have issues with this! If the clients wanted to truly retire on the land later, they were running the risk of council not allowing the land to be occupied or built on. I rang the agent immediately, and explained the situation. It's important that all parties work towards a common goal, and this was an agent I trusted. The agent said straight away if the bank wanted more land the vendors could could sell more land by adding more titles and revising the price. More land was added sufficient to meet the acreage required for council to grant dwelling entitlements. The clients, after considering that they wanted to legally occupy the land later, opted to take the offer. On the contract, we now had three titles for sale, all adjoining blocks, that once combined would meet the minimum size requirements of forty hectares for a dwelling entitlement. Upon ordering a valuation, I sent notes to the valuer to have this explicitly written in to the bank valuers comments. This did take extra time, but as both the clients and vendors agent understood, this was a necessary part of ensuring that we obtained approval.

Dealing with credit

Of course, once credit got the valuation and contract they questioned it, so we discussed providing the bank with comfort, by obtaining a letter from council explaining that the consolidation of the lots to one total area would give it dwelling entitlement. The council's town planners charged a small fee for this service and provided it in a couple of days. From there, we got stuck in the valuations department, as valuations weren't sure what to do with the comments. I rang the head of credit, and discussed the predicament. He requested a letter of undertaking from the clients that they would combine the lots through the Land Property Information office within twelve months, and a full approval was granted.

Of course this is not something that happens every day, but each property, or client has their own personal hurdles and simple negotiation is all that is often required to bring all the parties together.