We're currently in the process of refinancing our 4 investment mortgages through a mortgage broker (we've previously dealt and negotiated directly with the banks). Our total loan amount across 4 properties is about $1.4Mil with an LVR of 90% and the LMI waived due to professional concession. The interest rate that's been offered to us is 5.9% p.a. (being 0.9% below SVR). I'm a little unhappy with the valuation that's come back, I believe that it's been undervalued. We've also previously tried to negotiate a refinance with NAB, ANZ & CBA all at the same time and the same 4 properties have been valued by all three banks at the same time. NAB and ANZ have come back with comparable valuations while CBA came back significantly lower (by about 10% or slightly more). Has that been anyone else's experience with CBA valuations? Is the rate on offer (considering the LVR and the loan amount) just a "standard" deal or has the mortgage broker really made an effort to negotiate a good deal for us?
Jenny, we have dealt directly with the banks, ANZ mostly and also through a mortgage broker and our experience was that we didn't get a better deal through the broker than doing it ourselves. As far as I could tell, they don't have access to any special deals that we don't, they can simply access the information easier and quicker. The broker did take a lot of the paperwork off our hands though so definitely worth using. Steve has mentioned using business banking and getting to know your own personal business banker. That is always an option for you.
As for valuations, the banks will always undervalue in case you fall behind in repayments and they need to sell it quickly. Their valuation, as I understand it, is the quick sale value. Our loan value totals $1M and our discount is 0.8% so yours sounds ok. Most lenders have a retention department that offer special benefits to keep your mortgage being refinanced by another lender which I presume your broker would know about. Our broker says the banks also have 'specials' now and then for discounts if you're lucky and time your application right. Not sure how accurate that is and I don't think the banks would be very forthcoming with that sort of information.
Good luck with your refinancing. It's always a good idea to revisit your borrowings and make sure you're getting the best deal.
Hi Jenny,
5.9 sounds a good rate. Dealing direct with CBA in Brisbane we received 5.95 for about $1.7m of loans. My son down in Melbourne got 5.9 through a broker with CBA - go figure !!
Hi Jenny,
The rate is the rate, as many brokers have minimial discretion in getting something extra special. This is the domain of the bank, and business banking in particular. Brokers are better to:
1. Find you the best market rate since they are not tied to a single lender (like the banks are... CBA will not recommed a NAB loan, right)
2. Help you fast track your application process by helping you collate and submit the paperwork
3. Help you to avoid common errors that might otherwise cause your application to be rejected
Now, in relation to valuations, there are two types:
1. Internal - where a bank staff member 'drives by' the property (or maybe does an inspection) and comes up with a value.
2. Independent - where an external 'panel' valuer does the valuation
Logically, both use the same comparative (sales) data, yet the banks seems to be more conservative because they are employees (with less market accountability). Independent valuers need to be more 'market realistic' because it is the client (not the bank) that normally pays the bill. That said, this is not a hard and fast rule!
Hope this helped.
- Steve