Just wondering if anyone could help, we are wanting to refinance our home loan to purchase a caravan. We understand we will have to tell them we want to do renovations to get the money but unsure how it works, are we able to refinance the home to do this? Are we just taking the equity out?
6 Replies
You don't have to say you are doing home renos, I know people who have refinanced to go on holidays, start a business etc loads of reasons. In effect you are using the equity in your home to borrow more money at home loan rates.
You have to be upfront, as they'll pay whomever your buying the caravan off directly, they won't just hand you the cash and away you go. So if it were for renovations, you'd have to get quotes from trades and they would pay the trades directly. IF you have a lot of equity in your home loan, then it shouldn't be a major problem, but if you're talking only have mere thousands... you might have trouble. They need to recoup their losses should you default and they take into account the worth of the caravan + value of home. Has to be at least 20% higher value (currently) than what you would owe... otherwise, you'll pay mortgage insurance.
Provided you have enough equity in the house you don't have to tell them much at all. We drew down nearly $50k 9 months ago to do stuff around the house (we haven't down anything yet) and the money is still sitting in the loan account as available credit. We didn't have to give quotes or anything like that. Just filled in some forms that the bank gave us and a few weeks later then money was available in the loan account.
Yep, same here. As long as you aren't borrowing more than your homes worth then no problems.
Family members have paid for cars, holidays etc. they don't need quotes. You just receive available credit in your account.
Do you organise the valuation or does the bank?
The bank does