Refinance Misconceptions

Refinancing is the process of moving your existing home loan agreement to a new lender. Some common reasons why a borrower may do this is to achieve a cheaper interest rate, to structure their debt in a more suitable way, to consolidate their debt or look to release equity from your property.

With interest rates on the rise, many borrowers are taking action to research the market for a better deal however for some, there are still misconceptions holding them back which we will unpack below.

Myth #1 – I don’t have the time and it’s too complicated

This is where a good mortgage broker comes in to play and can break down any perceived complexities. Although the concept may seem like a time-consuming process, the thought and effort required to address your most important investment doesn’t take all that long. Here is a snapshot of some key stages that can quickly be completed under the guidance of a good Mortgage Broker:

  • Making the time to speak to your Broker
  • Assess the possibilities select the right path for you
  • Provide any documentation required
  • Sign and complete a loan application

When you consider the benefits and potential cost savings results, a small amount of effort can be well worth it.

Myth #2 – There are large fees involved in refinancing

Whilst there are common fees and charges in leaving an existing bank and setting up at a new bank, generally the overall costs are outweighed by the long-term benefits of refinancing. The costs will vary from lender to lender however some costs to be aware of are Discharge Fees, Applications Fees, Valuation Fees, Land Registration Fees, and ongoing Annual Fees.

Your Mortgage Broker will provide a breakdown of these costs and unless you are able to save money or achieve the new loan structure you require, you are better off staying with your current lender. Some lenders also offer cash-back refinance deals which provide an added incentive to receive a cash reward for moving lenders whilst at the same time secure a cheaper rate.

Myth #3 – Refinancing is only done by people wanting a better rate

As noted earlier, moving to a new bank purely to secure a lower interest rate isn’t the only reason why borrowers will refinance. Whilst this motive is common, there are other reasons why a borrower will look to refinance:

  • Access to better features and facilities such as an offset account
  • Release equity for investment opportunities, household projects or other acceptable purposes
  • Discharge a Guarantor
  • Consolidate debt

Engaging with 40 Forty Finance to enquire about your refinance possibilities is the first step in reviewing your existing debt position. We can help evaluate your position and work with you to research the market and identify alternative lenders that will suit your needs. Being proactive will help you save time and money. Feel free to get in contact with one of our friendly brokers to start your refinance journey.

The Journey of Home Ownership Using a Mortgage Broker

Are you planning to purchase your first home, next home or an investment property and wondering what’s involved when using a Mortgage Broker from 40 Forty Finance?

With 70% of all home loan applications facilitated by Mortgage Brokers in Australia, more and more borrowers are turning towards these lending specialists to help navigate the buying process and lending market. With home ownership often the biggest expense in one’s life, it is fundamental that the right guidance and support is provided from the outset.

Applying for a home loan can be complex, time consuming and daunting, especially if it’s your first home, so here is a summary or the major steps a prospective borrower will encounter throughout their journey of home ownership:

1. Connecting with 40 Forty Finance

Connecting with 40 Forty Finance can be as simple as reaching out to one of our brokers where they will arrange a time to speak to you. It is within this phone call that the broker will ask several questions relating to your goals and objectives as well as your current financial and lifestyle situation.

2. Assessing Your Circumstances

Once you have had initial contact with a 40 Forty Finance broker, you will be asked to complete a Privacy Consent Form and fill in an online Fact Find. It is within this Fact Find that you will be required to list your personal, employment and financial information which will be used to model up various scenarios and lender products that suit your needs. In addition, you will be provided with a list of documents to provide which will enable 40 Forty Finance to clearly assess your position.

3. Reviewing the Options

It is at this stage where a Zoom meeting will be arranged to run through possible options relating to your goals. 40 Forty Finance will present and recommended clear lending structures and strategies that are consistent with your objectives and requirements. This is a great opportunity to ask questions relating to specific lender requirements, assessment time frames or any other expectations.

4. Lodging your Application

Once you have decided on your preferred course of action, an application is made to your preferred lender. The application is filled in by 40 Forty Finance and you will be asked to sign application forms and provide any additional supporting documentation required for your submission.

5. Lender Assessment & Decision

Once 40 Forty Finance lodges your application, you will be given clear information as to the likely assessment timeframe at your preferred lender. It is during this assessment period that the lender may request further information which will be relayed back to you to source and provide. 40 Forty Finance with liaise between the lender and you to ensure the lines of communication is very clear. Once your loan is approved, 40 Forty Finance will complete the signing of loan contracts with you and guide you in preparing for settlement.

6. Settlement

Preparing for settlement is where 40 Forty Finance will liaise with your Conveyancer or Solicitor to ensure your purchase goes through smoothly. Most of the work is done well before settlement day so there is a little stress as possible on the actual day when the property becomes your home.

7. Home Ownership

After settlement has successfully gone through you can now enjoy your new property. Now that you have a home loan in place, 40 Forty Finance will provide ongoing updates and loan reviews annually to ensure your needs are met and your home loan product remains the most competitive option for your circumstances.

If you are looking to start your home ownership journey or wish to discuss anything about homes loans then click here to get in touch with one of our friendly brokers.

Mortgage Broker vs Bank: Who should you approach to obtain a home loan?

Whether you are buying a property for the first time, looking to upgrade your home or purchase an investment property, you might be wondering if you should use a Mortgage Broker or go to a bank directly.

Both avenues offer their own unique advantages, so here are some considerations to help you make the choice:

Mortgage Brokers

A Mortgage Broker is a home loan specialist who acts as the intermediary between a borrower and a lender. With access to a panel of multiple lenders, brokers can research and identify the most suitable home loan product for a borrower’s given position. With 68% of all residential loans now being written by Mortgage Brokers, more and more Australians are turning to brokers to navigate the complex world of the lending market.

In addition to identifying and comparing lending products, brokers also play the key role in educating and determining the borrowing capacity of borrowers as well as handle the time-consuming paperwork relating to the loan application. Furthermore, once a loan settles a broker then performs the important role of ensuring you continue to have a competitive deal while also assisting you with any future lending needs.

Typically, most Mortgage Brokers won’t charge any fees to borrowers. Brokers are remunerated by the lender through commission earned after the loan settles.

Benefits of using a Mortgage Broker:

  • Provide guidance to borrowers through calculating borrowing power and guiding you through the important stages of the purchase process
  • Offer a broad product range
  • Identify the most suitable lending solution, resulting in fewer applications and a stronger credit score
  • Project manage and process the entire loan application
  • Have a single point of contact throughout the entire process, no matter which lender you apply to
  • Review your home loan post settlement, answer any future questions and ensure your deal is still competitive
  • There is no additional cost to the borrower

Direct to the Bank

Going direct to a bank is still an option in obtaining a home loan. This can be done by simply showing up at your local branch and requesting a home loan. Alternatively, most lenders have the option now to chat through options over the phone with a lending specialist. Going direct is a very different approach to using a Mortgage Broker as you will only be offered a product from that given lender and no comparison will be made against other lenders.

Benefits of going direct to a Bank: 

  • A lending specialist from a specific bank will have intimate knowledge of the current products and policies
  • Could be faster due to the lender process the loan application directly rather than going through a Mortgage Broker
  • Some borrowers might find the convenience and comfort of turning to a bank that they have dealt with for many years more favourable

The good thing is that as the borrower, you have a choice and ultimately it will come down to what your preference is. Whether you opt to have the guidance and support from a Mortgage Broker or if you prefer to go direct to a bank, at the end of the day there isn’t a right or wrong way.

With a house purchase typically being one’s biggest expense, more and more are turning towards the guidance and support of a broker. If you wish to discuss what may be possible at no cost then be sure to get in touch with the team at 40 Forty Finance.

Home Loans for Registered Nurses & Midwives

Are you a Registered Nurse or Midwife and seeking to get into the property market?

Due to the recognised stability and professional accreditation of your employment, some lenders will now waive the hefty fee of Lenders Mortgage Insurance (LMI). Certain lenders see borrowers of these certain professions as low risk and therefore see it as good business to try and win their business. For Registered Nurses and Midwives, this is a great opportunity to save thousands of dollars and may be the difference in entering the property market sooner.

What is Lenders Mortgage Insurance?

Generally, if you are seeking to borrow more than 80% of the value of the property, you will have to pay LMI. LMI is an insurance policy taken out by the banks to protect them in the instance that you can not make repayments on your loan. This fee is incurred by the borrower and is a once off charge that can either be paid upfront in cash at settlement or added to the total loan amount. This charge is around 2-2.5% of the purchase price so on a $500k purchase, can be $10,000 – $12,500.

What are the benefits of waiving LMI?

  • Save on thousands of dollars for a fee that is only protecting the bank
  • Purchase with a lower deposit without incurring insurance fees
  • Makes a purchase with a 10% deposit more cost effective, thus reducing the need to get to a 20% deposit which will significantly reduce the time to save funds to get into a position to buy

What are the Qualifying Criteria?

  • Registered Nurses and Midwives need to demonstrate that they have an active and valid registration through the Australian Health Practitioner Regulation Agency (AHPRA)
  • Must be an Australian Citizen or Permanent Resident working full time in Australia
  • Subject to meeting the minimum gross income threshold requirement of $90,000 per annum (not including superannuation). This can include overtime/shift allowance payments
  • Eligible Registered Nurses and Midwives can have the LMI fee waived when borrowing up to 90 per cent of the property’s value

Case Scenario: Jackie – Registered Nurse 

Jackie is a Registered Nurse working full-time in a Melbourne Metropolitan Hospital earning $100,000 plus superannuation. She has been saving for her first home for several years and has managed to save a deposit of $60,000. Jackie’s maximum borrowing capacity is $510,000 and the property she has her eye on is worth $560,000. Using this offer, Jackie can purchase the property with a 10% deposit of $56,000 and take out a loan for the remaining 90% of the purchase price of $504,000.

Usually, borrowing 90% of the purchase price would incur a LMI fee of approximately $14,000, meaning that she couldn’t afford the property due to having not enough cash or borrowing power to fund the fee.

Jackie being a qualified and Registered Nurse, she qualifies for this offer resulting in a saving of $14k in insurance costs and being able to secure her dream home sooner.

If you are a Registered Nurse, Midwife or Health Professional seeking to purchase a property and would like to find out if you qualify for any LMI waiver then please reach out. The power of having a Mortgage Broker on your side will allow you to find out what is the most suitable option for your given circumstances.

Advantages of Refinancing in the Current Market

Although refinancing your home loan in a rising interest rate market may seem like a daunting prospect, understanding the advantages may be the positive catalyst for change.

The Reserve Bank of Australia’s swift and steep rise of the cash rate throughout 2022 has seen many Australian households feel the pinch as mortgage repayments rise. The average repayment on a $800,000 mortgage has risen by $1,000 per month from April when the cash rate was at a record low of 0.10 per cent. With the current cash rate set at 2.35 per cent, and expectations that further rises are on the horizon, the incentive for refinancing has never been stronger.

With most lenders regularly passing on these rate rises to their borrowers, what are some of the advantages in refinancing?

  1. Cheaper Interest Rates for New Customers 

Lenders will always provide the best rates to new customers compared to their established customers. Although this may seem counterintuitive in not rewarding loyal mortgage holders, the harsh reality is that most lenders take the stance that their customers don’t have the patience or time to move lenders. Through advertising lower rates and attracting new customers, banks fight hard in incentivising new business whilst carving out the profitability of existing customers who become complacent with their rate.

Most banks will almost always pass on any cash rate rise set by the Central Bank due to changing market conditions and the need to manage internal margins and costs. It is not uncommon for a home loan customer to have a higher interest rate than what may be offered to a new borrower in today’s market, even though they may have only settled on their mortgage 12 -24 months ago.

  1. Cash-Back Offers

With lenders competing hard for new business, cash-back offers are becoming increasingly used as a way to incentivise existing borrowers to move lenders. In addition to offering cheaper rates, some lenders are also offering a cash-back reward in moving lenders which can be anywhere from $2,000 to $5,000 in some instances. Depending on lender and the terms and conditions relating to these cashback offers, substantial savings can be secured in these circumstances.

  1. Resetting Loan Characteristics

An advantage to refinancing allows the opportunity to reset loan characteristics such as the term of the loan, the type of repayment (i.e. interest only or principle and interest on investment loans) and the type of rate such as, fixed or variable.

Throughout the course of any mortgage, many life changes and goals can occur so refinancing to a new lender and changing the loan characteristics to suit your current needs is a good way to ensure your mortgage is right for you. An example of this would be moving lenders and pushing the term of the loan back out to 30 years to ensure your monthly minimum mortgage repayments are as low as possible. By doing so, you may improve your monthly cash flow position whilst simultaneously acquiring a lower rate.

  1. Ability to Access Equity

A savvy way to access equity within your property is to refinance to a lender offering a cheaper rate whilst also accessing the equity in the property without dipping into hard earned savings. This equity could be used for home improvements or other investments which opens up opportunities whilst also ensuring you have a competitive mortgage rate.

It is important to note that refinancing does come with associated costs so it is important to speak to your broker to ensure that you are in a position to refinance and the cost analysis is done to ensure it is a financially wise move for you.

How to Deal with a Rising Rate Environment


After 2 years of record low interest rates, The Reserve Bank of Australia (RBA) has lifted the cash rate for the third consecutive month. The RBAs latest rise of 50 basis points now puts the official cash rate at 1.35 per cent. All lenders are expected to pass on this rate rise to borrowers which will result in a $500,000 home loan seeing an increase in repayments of $144 per month.

The rise in rates will place added pressure on household budgets, however there are some strategies that can be implemented to manage your loan repayments

  1. Ask the Bank for a Cheaper Rate

The quickest thing you can do is pick up the phone and negotiate with your existing lender to offer a discount on your current variable home loan rate. Before you do this, you want to be armed with the knowledge of competing lender rates as well as your current bank’s rates on what they are offering new borrowers. Remember, banks generally offer sharper rates to new customers so understanding what the going rate is on a similar mortgage is important to negotiating your position.

If the bank isn’t willing to offer a rate reduction, threatening to refinance is the last resort. Given that refinancing can be time consuming and not always an option, many banks assume that most people are too lazy to refinance. Make it clear that if your rate isn’t reduced then you willing to refinance to a different bank offering a better deal.

  1. Refinance

Refinancing to a new bank and taking advantage of a better deal may provide you with a greater capacity to manage repayments. If your existing lender isn’t willing to sharpen your rate, it is then time to compare what other banks are offering.

Before refinancing, it is important to ensure that the benefit in moving lenders doesn’t outweigh the costs. For example, you will need to have at least 20% equity in your home otherwise large Mortgage Insurance fees will incur. Additionally, there are fees and charges in moving lenders so weighing up the interest savings verses these costs is important to figure out if it is worthwhile moving banks.

By talking to a Mortgage Broker who has access to multiple different banks, a comparison can be made against your existing deal to see if the concept of refinancing is a genuine reality.

  1. Access funds in your Redraw Facility or use an Offset Account

A redraw facility allows you to take out any additional repayments that you have made over the required minimum repayments on your home loan. Where you need some extra cash reserves to make repayments, accessing these funds is a good option.

An offset account works differently to a redraw facility whereby this is a separate transaction account that is linked to your home loan. By storing your savings within this account, you will be reducing the interest charged on the linked variable home loan which enables you to pay off your mortgage faster. Holding funds (savings) in your Offset account is a great way to lower your interest bill and ultimately trim years off your home loan term.

  1. Financial Hardship Arrangement

Financial hardship is when there has been a change in your circumstances and you are finding it difficult to make the repayments on your debts when they are due. This is experienced by many in times on illness, unemployment, relationship breakdown, natural disasters or reduced income. The good thing is that every bank has a Financial Hardship Team who are there for support and to map out a plan to manage the repayments. This may take the form of reducing or even stopping the repayments for a period of time so the borrower can get their finances in order to recommence the repayments. Although one might think of the repayments as a ‘holiday’, the interest is still accrued on the daily balance of any loan and you will still have to catch up on your repayments in time.

In the instance where a Financial Hardship arrangement has been made, this will be added to a borrower’s credit report providing a comprehensive picture of the credit worthiness over a period of 24 months. This credit report will alert to events where a repayment has been missed which in turn will lower the borrower’s credit score. Missed repayments don’t just stop at home loans but also extend to other credit obligations such as personal loans, credit card repayments or car loans for example. The good news is that in the instance where a missed repayment incurred and a satisfactory explanation can be made (i.e. moved house and repayment notification was sent to previous address), then you can request a correction and dispute any defaults on your credit file.

The key thing when any Hardship is applied for is to act early. Your bank wants to work with you to solve the problem, so notifying them before you start missing repayments is critical to finding the best outcome.

  1. Other Support

Ultimately, increased costs to anyone’s budget is stressful. Having a mortgage broker proactively manage any of the above with you will ensure you are well supported and taking the right action at the right time. If you think 40 Forty Finance can be of any assistance to you, please don’t hesitate to reach out.

Interest Rate Rises

The Reserve Bank of Australia (RBA) have decided to raise interest rates for the first time in 11 years. This means that for those that have a variable home loan, the rise in rates will have a direct impact on your repayments as all lenders pass on this cash rate hike to borrowers. Traditionally, lenders will take no longer than a week to pass on this increase to their borrowers.

Is a rate rise to your home loan avoidable?

In short, there is no way to avoid a rate rise nor any future rate rises. One option you do have is to fix a portion of your loan. Currently, the interest rate on Fixed loans is higher than variable rates due to banks pricing into the Fixed rate what they predict will happen over the next few years. Fixing a portion of your loan now will provide protection in the event of future rate rises, however doing so will be at a higher rate and therefore increase your monthly repayments. The main benefit of fixing your loan is that doing so will provide a sense of surety and consistency in repayments over the fixed term.

What happens if my home loan is Fixed?

If your loan is Fixed, the rate rise by the RBA will not change your repayments on your fixed loan. We are not recommending any of our clients to break their fixed loan at this time. Rather, we recommend waiting until 1 month before it expires before analysing other options.

Should I refinance to a new Lender?

Different Lenders will pass on rate rises at slightly different times and in different increments so might look like a better rate at one lender today may not be true in time.

Are more rate rises coming?

Yes, there certainly will be more rate rises in the next 18 months. CBA Chief Economist Garth Aird expects the cash rate to rise by 1.15% by the first quarter of 2023 and AMP Chief Economist Shane Oliver is anticipating an increase of 1.4% by the end of 2023. We can also see what the banks are predicting to happen given the average fixed rates for 2 and 3 Year Terms are around 3.5% and 4%+ respectively.

Do rate rises impact my Pre-Approval?

As rates rise, your borrowing power (ability of your income to repay debt) reduces. This means that any pre-approval you have in place will need to be reviewed to ensure the loan amount you are pre-approved for is still achievable. With this in mind, we strongly recommend all clients reach out to us before making any offer or bidding on a property to ensure we review your financial position in line with the current lending conditions.


With great movement in the lending space, now is a good time to get in touch with 40 Forty Finance to explore your option on new and existing finance.

Home Loans for Physiotherapists & Podiatrists

Are you a certified and practicing Physiotherapist or Podiatrist and looking to get into the property market?

Did you know that some lenders offer discounts to this group of health professionals when it comes to borrowing money, specifically discounts on Lenders Mortgage Insurance! This is very unique and some banks recognise the stability of these professions and subsequently are happy to waive this often limiting fee for those looking to purchase a property.

What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance (LMI) is an insurance policy taken out by the banks to protect them in the instance that you default on your loan. If you have less than a 20% deposit, or in other words, are seeking to borrow greater than 80% of the value of the property, LMI will incur. It is a once off expense that is paid by the borrower at settlement or is added on to the total loan amount.

Benefits of being a Physiotherapist or Podiatrist?

  • Waived LMI for funds borrowed up to 90% of the property value
  • Save on thousands of dollars for a fee that is only protecting the bank
  • Purchase at a lower deposit without incurring insurance fees
  • Purchase sooner
  • If you intend to purchase a property with your partner, husband or wife, the LMI waiver will apply to the entire application if you are a certified Physiotherapist or Podiatrist

What is the catch?

  • There are only a few lenders that offer this policy per profession
  • Must be a fully qualified Physiotherapist or Podiatrist
  • Registered with AHPRA
  • Working full time in Australia

Case Scenario: Jess – Physiotherapist

Jess is a full-time physiotherapist and has been saving for her first home. She has managed to save $50k

Jess can borrow $441k and the property she has her eye on is worth $490k. This means that she would be borrowing 90% of the value of the house

Usually this would incur an LMI fee of approximately $9k meaning that she couldn’t afford the property

This shows you that by Jess being a Physiotherapist she has just saved $9k in insurance costs

Case Scenario: Sarah & Daniel 

Sarah is a full-time physiotherapist and Daniel is a full time Engineer and they have been saving for their first home. They are in a de facto relationship and have saved $112k. Their dream house is worth $700k

Their combined salaries allow them to borrow $630k which is 90% of the value of the house

Usually this would incur an LMI fee of approximately $17k meaning that they couldn’t afford the property if they didn’t have access to this waiver.

This shows you that although one applicant is a physiotherapist, the LMI waiver policy is still applicable for the entire home loan application


Saving money on LMI may very well be the key to entering the property market sooner. The power of having a Mortgage Broker on your side will allow you to find out what is best for your given circumstance. If you are a Physiotherapist or Podiatrist and wish to find out more then get in touch with the team at 40 Forty Finance to run through your options.