How WA brokers are refinancing in a low Val, high LVR market

Posted on: 06 Jun 2016


It’s common knowledge that in recent times the WA property market has experience a slump in property valuations, reasons for this are varied and complex including GFC, industries scaling back on local business investment and some business running risky ventures before the fact then hit the insolvency brick wall after the fact.

In turn there is a flow on effect with a multiple of industries, notably the mortgage space. Time and time again mortgage brokers encounter lower than expected valuation coupled with a high mortgages making a refinance difficult on client affordability, LMI demands and/or LVR restrictions.

The rot has spread to other pockets of Australia also. What to do?

Case sample of a typical refinance deal from WA, consumers are husband and wife, both working full-time with two dependants:

  • Mortgage to refinance $480k
  • Unsecured debts to refinance $62k (Credit cards with WPC, ANZ and NAB)
  • Requiring $550k lend in round figures
  • Valuation $655k

This scenario places the deal at 84% LVR which increases the application scrutiny and introduces LMI costs to the client. Often the cost/benefit picture for the client changes once the deal goes beyond 80% LVR.

The key in dealing with this problem is the unsecured creditors.

The broker facilitating this deal contacted our office to seek out ways in reducing the LVR. After the client and broker engaged our services we were able to negotiate with Westpac, ANZ and NAB for a reduced settlement on the credit cards. The new refinance deal looked like this:

  • Mortgage to refinance $480k
  • Unsecured debts to refinance $29k (remaining balance of $33k to be waived)
  • Requiring $515k lend in round figures (79% LVR)

The unsecured creditors agreed to waive the balance remaining of $33k on condition the balance of $29k is paid, the clients VEDA report was NOT impacted by this transaction.

Credit Mediation Service Pty Ltd are professional debt negotiators. We specialising in assisting your clients with debt problems by seeking solutions through negotiations with their creditors. We do not engage in Debt Agreements or any kind of formal bankruptcy processes, rather we use your clients profile to build an effective argument for a reduction in their unsecured debts.

If you would like more information, please contact us on 1300 490 030 or visit us at or email us at [email protected]