Refinancing to reduce monthly mortgage payments
Jerry and Kate in their 40’s and are both full time emergency services personnel. Their salaries consist of standard hourly rates, shift loadings and regular overtime.
They had an existing $500,000 30-year home loan with the first 10 years being on Interest only terms. The interest only term was coming to an end, with the loan soon to change to principal and interest payments for the remaining 20 years of the loan.
This change meant Jerry and Kate would soon need to find $3163 each month to service the loan (an extra $1288 over and above their existing repayments of $1875 per month) which was beyond their current means and would place them in a difficult position.
They asked their bank for new loan with a 30-year term, but the bank rejected their request.
Jerry and Kate then approached two other banks but both of their applications for new 30-year loans were rejected due to “lack of serviceability” because of strict bank policies in relation to the treatment of shift loadings and overtime.
Oz Lend was able to use its experience in assisting emergency service personnel, to direct Jerry and Kate to a lender that who better understands the nature of Emergency Services Personnel remuneration, and who utilises more favourable serviceability assessment criteria.
As a result, Jerry and Kate received new 30-year loan at a lower interest rate than they would have paid staying with their old loan, and the new monthly repayment of $2,298 (being $865 per month lower than they would have had to pay without refinancing their loan) fell within their budget.
Jerry and Kate are relieved that they were able to resolve their tricky situation, and Oz Lend are very happy to have been able to use its experience and expertise to help them to have their full earnings considered, when their loan was being assessed.