Most people who ask us about refinancing in Chatswood own an apartment. Some bought off the plan in one of the towers near the station, some own an older walk-up off the Pacific Highway, and some are investors who have held a unit for years and never looked at the loan since. A smaller group own houses towards Chatswood West or on the eastern side near Willoughby.
The reason to look at it is usually the same: the rate has drifted up while new customers are being offered less. But refinancing a unit in a high-density suburb has a few traps that a house in Lindfield doesn't, and it's better to know about them before a lender has run a credit check on you.
Start with your own lender
Before anything else, ask your current lender for a better rate. Lenders call this a retention or repricing request, and it costs you nothing. If they come back with something close to what you'd get elsewhere, staying put avoids the fees, the paperwork and a new valuation.
We often make this request for clients as a first step, because it gives a real number to compare against. If the gap is still big after that, it's worth looking at moving.
The valuation decides more than the rate does
When you refinance, the new lender orders its own valuation. Your LVR is worked out from that figure, not from what you paid.
For a lot of Chatswood units, especially ones bought off the plan, this is the whole question. If the valuation comes in at or below what you paid, and you haven't paid much off the loan, your LVR could be above 80 per cent. That can mean paying lenders mortgage insurance again, which often wipes out what you'd save on the rate.
Houses have the opposite issue less often. Values on the house side of Chatswood have generally held up, but larger loans can narrow the list of lenders, and some reduce the maximum LVR as the loan size goes up.
We can usually get an indication of value before you apply, which tells you whether the refinance is even worth starting. Our post on what happens when a valuation comes in low covers the options if it does.
What lenders look at on a Chatswood apartment
These are general patterns. Every lender sets its own rules and they change, but these are the ones that come up most often in Chatswood:
- High-density postcodes. Some lenders cap the LVR in suburbs with a lot of new apartment stock, or limit how much they'll lend in one postcode. Chatswood is the kind of suburb that can attract those limits.
- How many loans the lender already has in the building. A few lenders cap their exposure to a single complex. If they've reached it, they may decline or lower the LVR, even though nothing is wrong with you or the unit.
- Floor area. Small one-bedroom and studio units can fall under a lender's minimum internal size. The balcony and car space usually don't count. This matters more for investors than for owner-occupiers.
- Building condition. If the strata report or the valuer flags defects, combustible cladding or a large special levy, some lenders will step back until it's resolved.
- Serviced or student-style apartments. Units with letting restrictions or hotel management agreements are a much smaller market and fewer lenders take them.
None of these mean you can't refinance. They mean the lender with the sharpest advertised rate might not be the one that will actually take the property, which is the main thing a broker sorts out before you apply. The same rules apply when you're buying, and we cover them in more detail in buying an apartment on the Lower North Shore.
Income: the other half of the refinance
A refinance is a fresh application. The new lender checks that you can afford the loan at today's assessment rate, using today's income and expenses. If your income has dropped, you've taken on a car loan, or you've moved from a salary to running your own business since you bought, you may not pass the new lender's test even though you've never missed a repayment.
We also see a lot of Chatswood borrowers who earn part of their income overseas or who are on a temporary visa. Fewer lenders accept that, and the ones that do often have lower LVR limits. That's worth knowing before you go looking for the lowest rate.
What refinancing actually costs in NSW
The usual costs when you switch lenders are:
- a discharge fee from your current lender
- NSW government fees to remove the old mortgage from the title and register the new one
- settlement or application fees from the new lender, if it charges them
- break costs, if any part of your loan is on a fixed rate
- lenders mortgage insurance, if the new LVR is above 80 per cent
Fixed-rate break costs and LMI are the two that can turn a sensible refinance into a bad one. The rest are usually modest, and many lenders cover some of them for new customers. Our step-by-step refinancing guide walks through the process from application to settlement.
Are cashback offers worth it?
Cashback offers come and go, and they're often the first thing people mention. A cashback is real money, but it's a one-off. A lower rate is worth more every month for as long as you keep the loan, so on most loan sizes the rate matters far more than the cashback.
Read the conditions as well. Most offers need a minimum loan amount and a minimum LVR, many are only for owner-occupiers, and some lenders will claw the cashback back if you leave within a set period. If you're likely to sell or refinance again in the next year or two, check that clause.
When it's a good time to look
A few moments are natural points to review a Chatswood loan:
- a fixed rate is about to end and you'll roll onto the lender's variable rate
- an interest-only period is ending and repayments are about to jump
- you want to release equity for a renovation, a deposit on an investment or to consolidate debts
- it's been two years or more since anyone looked at the rate
We wrote more about the timing in when to refinance your home loan.
How we help
Sabea is a mortgage broker based in Forestville and we work with owners across the North Shore, including plenty in Chatswood, Artarmon and Willoughby. We ask your lender for a retention rate, get a read on your property's value, check which of our 60+ lenders will take the building and your income, and only suggest switching if the numbers work after costs. For most residential refinances there is no fee to you. Book a call or ring 1300 001 755.
Frequently asked questions
Can I refinance a Chatswood apartment that's worth less than I paid?
Often, yes, but it depends on your LVR at the new valuation. If it's above 80 per cent you may need to pay lenders mortgage insurance again, which can cancel out the saving. In that case asking your current lender for a better rate is usually the better first step.
How long does refinancing take?
Commonly a few weeks from application to settlement. It can take longer if the valuation is challenged, the lender asks for more documents or the building needs extra checks.
What does it cost to refinance in NSW?
Usually a discharge fee from your current lender, NSW government fees to discharge and register the mortgage, and any fees the new lender charges. Fixed-rate break costs and LMI can add much more, so check those first.
Do some lenders not lend on Chatswood apartments?
Some lenders limit lending in high-density postcodes, cap how many loans they hold in one building, or set a minimum floor area. Policies differ, so a unit one lender won't take may be fine with another.
Should I refinance for a cashback?
A cashback is a one-off payment, while a lower rate saves you money every month. On most loans the rate matters more. Check the minimum loan size and any clawback conditions before choosing a lender on cashback alone.
General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.