Last week on Real Estate Talk I interviewed Andrew Mirams from Intuitive Finance. Andrew writes a lot of blogs, does videos, and a lot of audios as well, apart from on our show.
Kevin Turner: Good day, Andrew. Thank you for your time.
Andrew Mirams: Pleasure, Kevin. Great to catch up again.
Kevin Turner: Thanks for all your great content on Real Estate Talk, too. Really appreciating that. Andrew, I wanted to talk to you about refinancing because I know you wrote a blog article recently that’s up on our site.
Let’s talk about refinancing. When should you do it? What are the things that an investor should be considering when they’re doing it?
Andrew Mirams: At the moment, and over the recent times, Kevin, people always say to me that when interest rates are coming down it must be great for business. It’s actually a little bit funny.
It’s actually better for business when rates are going up. The reason for that is people actually look at their interest rates when they’re going up versus when they’re coming down, people tend to get complacent.
At the moment, we are suggesting that just about all people, again circumstantial, should have a four in front of their rate. Fives are the old 7% nowadays.
We’re pretty adamant that everyone should be reviewing and looking at their situation as it is.
Kevin Turner: Are there any pitfalls to this. That is a fairly simplistic view, isn’t it, to say you’ve got to go and refinance? What are some of the pitfalls?
Andrew Mirams: I think people often think that to refinance you have to drop everything and go to a new lender. That couldn’t be further from the truth.
We are very strong advocates of the devil you know versus the one you don’t. If we can potentially get you a better deal at the current lender by rearranging some things and taking some new loans or getting some equity released or positioning you for that next purchase, we can often get you as good a deal in the marketplace staying where we are.
There’s a few tricks and strategies that go around that, but we always try and keep a client at their current lender.
The other thing is people always assume that refinancing is just to get you a lower rate. It has to look at what the end goal is as well.
If you’re looking to buy another investment property or your first investment property and your current bank, Bank A won’t do it but Bank B will, then there’s a very clear reason for why we have to do it. You got to be careful while you’re doing it but there has to be the end goal in mind.
Another one is people tend to sit and go, “My bank will match that rate or come down.” They give their banks way too much credit in actually thinking there is someone sitting there behind their desk that actually, really wants to look after you.
They are big businesses, they are money-making machines, there’s not someone looking at your loans every day. By getting in a professional mortgage broker or someone else in to look or to review your whole situation is the best thing.
People look at their house insurance or their life insurance or things like that every year and they’ll quibble about $50 on a car insurance. We can save people thousands of dollars a year by actually reviewing their interest rates. It’s funny, isn’t it, what people will argue over?
Kevin Turner: It is. What about credit ratings? If you blunder into this on your own without some trusted advice, is there a risk there that you could damage your credit rating?
Andrew Mirams: Absolutely. That’s where we’re very strong. We’re not rate chasers. The interest rates are very, very important but they’re the last thing we actually address when looking at a client’s situation.
We’ll look at why have they come in and what are they trying to achieve. We’ll then position them and look to structure them, and actually then assign a lender and an interest rate that we think is the best in the market.
People that go out and see rates on-line and rate chase because this is great thing and then fall foul of those things or they don’t meet their credit criteria. Often they end up with two or three marks as inquiries on their credit rating.
That can be, by the time we do get you to the right lender, there will be all these credit inquiries. People and lenders have a funny way of then going, “What am I missing? What has someone else looked at that I’m not seeing?” That might be enough, a few inquiries might be enough to make a deal not get over the line.
Kevin Turner: Of course, there are a lot of honeymoon rates or those sweet deals to get you in that could be quite tempting for some people.
Andrew Mirams: Absolutely. They’re everywhere, especially in a really low interest rate environment that we’re in. The banks have never been more competitive in my over 27 years of being in the financing industry.
It’s never been as manic as what it is right now with banks competing harder. And often with honeymoon rates, or I tend to call them sucker rates, give you a six-month or a one-year intro but over the term of say the next three, four, five years, it will actually cost you a lot more than getting someone to review it and getting a rate assigned or a rate discount assigned to your loan for the life of your loan.
That’s far more important, Kevin, that just that quick fix.
Kevin Turner: Refinancing, of course too, Andrew, is not always about getting a lower interest rate. It could be that you might want to free up some money, too.
Andrew Mirams: Most of the clients that we see that actually we do refinance, whether at their current lender or into another lender, is all about the end goal.
It’s about how do we help them release equity, buy that car, go on a holiday, more importantly start to build their investment portfolio or add another property to their investment property portfolio, and things like that.
Very rarely, I would say less than 1% of our clients end up coming in just, “I want to refinance,” because they have something else in mind.
That’s where a good and strategic mortgage broker or lender will actually sit with you and work through, “What do you want to achieve? How do you want to achieve it? What are the goals?” Then assign a strategy that fits in behind that.
Kevin Turner: If this sounds like what you’d like, then we’d strongly suggest you contact Andrew and his team, Andrew Mirams at Intuitive Finance.
Of course, you can contact him by having a look at their sponsored channel at Real Estate Talk. Lots of really great advice there, too. You contact Andrew directly. Andrew, thank you very much for your time today.
Andrew Mirams: Thanks, Kevin, great please. I’d love to help anyone that’s out there that thinks they might benefit from being in contact with us.
Kevin Turner: Thanks, Andrew.
Andrew Mirams: Cheers.
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