A two-stage refinance strategy delivering immediate relief and long-term savings
You have stable employment, a steady income and your financial circumstances have improved. But there is one problem: your credit history is still following you around.
That was the situation facing a couple who came to Venro Finance after a period of credit impairment left them paying well above-market interest rates and with limited options when it came to borrowing.
Both clients were PAYG employees with stable employment and income, but their previous credit issues meant they were still relying on a non-conforming lender for their home loan. They were paying a high interest rate and, when they needed additional funding to purchase a vehicle, traditional lenders were not prepared to help.
They were doing many of the things lenders want to see: stable income, employment and improving financial circumstances. The problem was that their credit history had not yet caught up.
So the question became: how could they reduce their mortgage costs, access the funding they needed and put themselves in a stronger position to return to mainstream lending?
Sometimes the first refinance is about creating a pathway to the next one
The clients approached Venro around 12 months ago looking for a way to reduce the cost of their home loan while also securing funding for a vehicle.
The obvious goal was to find a better interest rate. But Steve and the Venro team were looking at something bigger.
If they simply found a short-term solution for the vehicle and reduced the interest rate slightly, the clients could still be stuck with limited lending options. Instead, Venro developed a two-stage strategy designed to provide immediate relief while giving the clients a clear pathway back to mainstream lending.
The first step was to work with the clients’ existing non-conforming lender. Venro successfully refinanced the home loan from 8.5% to 7.3% and secured the additional funding required to purchase the vehicle.
That delivered an immediate reduction in their interest rate, but there was another important part of the strategy.
Why separating the vehicle debt mattered
A home loan and a vehicle loan are very different types of debt. One is attached to an appreciating asset, while the other is funding something that will depreciate over time.
So rather than simply adding the $45,000 vehicle funding to the home loan and letting it run for decades, Venro structured it as a separate loan facility designed to be repaid and closed within three years.
At the same time, the home loan term was reduced from 27 years to 20 years. The clever part was that repayments were kept broadly aligned with what the clients had already been paying.
This meant the clients could work towards paying their home loan off sooner without creating an entirely different repayment burden overnight.
It was not just about getting a lower rate. It was about making sure the debt was structured in a way that made sense for what the money was actually being used for.
So, what happens when your credit history is improving but you are not quite back in the mainstream market?
This was the bigger question for the clients.
Their circumstances were improving, but rushing into another refinance before their credit profile had sufficiently recovered could have meant missing out on better lending options later.
So instead of treating the first refinance as the finish line, Venro established a 12-month plan. The clients could focus on maintaining their improved financial position while giving their credit profile time to recover.
The goal was simple: get them out of the high-cost lending environment as soon as possible, then look at what could be achieved once their circumstances had strengthened.
Twelve months later, the strategy paid off
Fast forward 12 months and the clients were in a very different position.
Their credit profile had improved enough for Venro to approach mainstream lenders again. This time, they successfully refinanced away from the non-conforming lender and into mainstream finance.
The result was a further 1.2% reduction in their interest rate.
Combined with the earlier reduction, the clients had moved from an 8.5% interest rate to a significantly more competitive lending position, while also shortening their home loan term from 27 years to 20 years.
Their $45,000 vehicle debt was also on track to be repaid within three years rather than remaining attached to the home loan for the next two decades.
The numbers tell the story
What started as a request for a lower mortgage rate and some additional vehicle funding ultimately delivered a much broader financial improvement.
The strategy helped the clients:
- Reduce their initial interest rate from 8.5% to 7.3%
- Secure $45,000 in vehicle funding when mainstream lenders could not assist
- Separate their vehicle debt from their home loan
- Structure the vehicle debt for repayment within three years
- Reduce their home loan term from 27 years to 20 years
- Successfully refinance to a mainstream lender 12 months later
- Secure a further 1.2% reduction in their interest rate
- Save approximately $10,000 per year in interest
The first solution does not always have to be the final solution
This is perhaps the biggest takeaway from the clients’ experience.
When your credit history has been damaged, it can feel like you are stuck with the consequences long after your financial circumstances have improved. A better lending outcome may not be available immediately, but that does not mean you have to accept the status quo indefinitely.
For these clients, the strategy was not about finding the perfect loan on day one. It was about making the best move available at the time, structuring the debt carefully and having a clear plan for what came next.
Twelve months later, that plan had worked. They had moved back into mainstream lending, reduced their interest rate again, shortened their home loan term and put a clear timeline around their vehicle debt.
What started as a refinance to provide some immediate breathing room ultimately became a pathway towards a much stronger financial position.
Could a two-staged refinance strategy work for you?
If your financial circumstances have improved but your credit history is still making it difficult to access competitive lending, it may be worth looking at the bigger picture rather than simply waiting for the perfect loan to become available.
The right strategy might not be about finding one lender who can solve everything today. It could be about understanding what is possible now, what needs to change and what you could potentially access further down the track.
At Venro Finance, the goal is not just to find a loan. It is to understand where you are now, where you want to get to and build a lending strategy that helps connect the two.