Agribusiness refinancing is quite common today, allowing borrowers to source and secure better deals than they got on their original loan.
If you have been with your bank for more than three years on a variable rate, the chances are that your current variable rate will be higher than you can get now as a new client at another bank – banks tend to increase their variable rates (by not passing on the full Reserve Bank rate cuts) and fees to their existing clients over time. Your risk margin is commonly increased at annual review, unless you are on certain rates.
Most banks are prepared to offer very attractive incentive rates to win new clients, so there is a good financial reason to consider refinancing.
Refinancing can be particularly effective when you have already made repayments on your original loan and/or when the value of your property has increased (improving the equity ratios).
Our mortgage brokers will help you evaluate your options. Contact us today.
Why refinance your farm?
The main reason to refinance your business debt is to save money. Over the life of a loan, you can potentially save thousands of dollars on repayments.
Typical costs of refinancing
Generally, when business debt is refinanced, you can expect to pay:
- an application fee to the new bank
- a valuation fee, as part of the mortgage process
- mortgage discharge and registration fees.
These are what we refer to as “switch costs”. In many cases, however, banks will waive or meet your switch costs to get your business.
How to refinance
Refinancing your loan is normally easier than it was to obtain the initial loan. This is because much of the work that you (or your broker) did to get your original loan can be simply updated and submitted to banks as part of a refinance application.
If you’ve had your current loan for several years, you have probably paid off some of the loan and/or the value of your property will have increased – this means that you are in a stronger financial position to borrow, and you’ll be able to access better rates.
Generally, without negotiation, you won’t be rewarded for your improved equity position by your current lender, but another bank will view your loan as lower risk, and offer better rates to reflect that reduced risk.
Talk to Eakins Finance & Insurance to find out how long it will take to refinance your loan, and what information you need to gather to do it.
We will prepare a credit submission on your behalf and request tenders from the lenders so that they know they are in a competitive environment. We’ll give you a comparison of your current offer against the new offers so that you can make an informed decision about switching.
Contact our team of mortgage brokers today to get the process started.
Loan refinance comparisons
If you are considering refinancing, it’s essential that you research the loan market to understand how competitive your existing loan is, and what the alternatives are.
Eakins Finance & Insurance can do a thorough review of the loan market on your behalf – most of the time, we can find a much better rate and terms than your current deal.
Call our agribusiness finance brokers today to find out how much you can save through refinancing your farm.