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If you now have multiple Loans and Credit Cards, including car loans on top of your Home Loan you may find things are getting a bit stretched.

If bills and payments are actually starting to run late, or perhaps a Tax Bill is involved, the banks won't consolidate your debts into a refinance at all, let alone at the same interest rate.

Assuming you have enough Equity in your property you may be able to do a Non Conforming Home Loan with a specialist lender to make things more affordable but the Interest rate is going to be 1.5% dearer than your existing home loan.

Its crossing your mind it may be better to sell and buy again later.

Lets look at the possible costs on selling a $700,000 Home with a $450,000 mortgage.

This person owes another $100,000 with a combination of Car loans, Credit Card and Personal Loans

Sales commission 2%     $14,000
Moving Costs      $3,000
2 years rent  if they can get a suitable house at $500,000    $44,000
Buy gain 2 years later. Possible Price rise 10% maybe a lot more  $70,000
Stamp Duty Legal Fees 5% of sales price Estimate   $38,500  
Moving Costs again   $3,000
Possible Total $172,500

 

Extra Interest paid on refinance just Home loan

Home Loan original 450000 @5% 22,500 New Loan 6.5%  29250 Per Year              

Difference per year 6750  $13500

Saved Interest on Cards, Personal Loans say

100,000 @ average of 15% is $15,000 -

 Less new interest on 100,000 @ 6.5% 6500

Saving of $8,500       

($17000)
Even if there were legals and fees of      $15,000
The cost over 2 years would only be an extra        $11,500
   

If payments were maintained on time for 2 years you could probably refinance back to whatever the competitive rate is in the marketplace.

It would be considerably less than the 172,500 you would fall behind selling and re entering the market.

A 30 year loan of  $450,000 @ 5% =2416per month

+ 100,000 @ 15% per year over 5 years 2379 per month    Total   $4795 per month
A Consolidated $550,000 30 year loan at 6.5% per month   Total   $3476 per month
A reduction of payments of     Saving   $1319 per month

 

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Established 2010

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