How to save by refinancing from Keystart
Keystart’s Interest Rates
Keystart interest rates had grown from a high of 4% last year to 8.01% this year. Buyers who had maxed out their borrowing capacity when rates were low will struggle during this season. At the time of writing this post, Keystart has a variable rate of 8.01% and a comparison rate of 8.11%, which is significantly higher than many full-doc lenders in the space.
Helping New Home Owners
Keystart is a great lender when you try to enter the property market. Where traditional lender requires a minimum of a 5% deposit and charges you mortgage insurance, Keystart requires only a 2% deposit and will not charge you any mortgage insurance. However, new property owners would have to pay a slightly higher interest rate to cover the risk.
When interest rates were still low, this was a very doable option, allowing new homeowners to own a home at a slightly higher interest rate while enjoying the LMI waiver and the fact that you only need a 2% deposit.
But since the interest rate has grown exponentially, the cause for concern is for low-income earners with a Keystart loan. According to an article by ABC, many low-income earners would have to go to emergency food relief to provide support while the bulk of their income would be going towards their mortgage.
Refinancing from Keystart
For homeowners who are under Keystart, refinancing would be their saving grace. If clients are eligible to refinance, we are looking at around mid-5 % of interest payments compared to 8%. Given a scenario of purchasing a property at $560,000 over 30 years if you can refinance your 8% to 5%, we are looking at repayment reduction of ~$1,000 per month.
To refinance, It will help if your property has risen in value since the start of your Keystart home loan. There is a possibility of avoiding paying the mortgage insurance if the LVR is 80% or lower and the lower interest rate.
And obviously, this is also subject to the new back eligibility criteria
So I will leave you with this, whether you are refinancing from 8% at Keystart or another lender, speak to us and let us find you the best rates in the market. Our consultations are always free, so get started below!
