interest only loans

Discussion in 'Money Management & Banking' started by drunkenguru, 27th Jul, 2007.

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  1. drunkenguru

    drunkenguru Member

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    Sydney, NSW
    hi, this may be an easy one but i haven't been able to find a straight answer.

    i'm looking to change my P&I loan on my PPOR to IO loan with offset account. but i understand that IO loans are generally IO for a short term then revert back to P&I. is this correct? can you get a loan that doesn't revert back to P&I?

    thanks in advance
     
    drunkenguru, 27th Jul, 2007
    #1
  2. gad

    gad Well-Known Member

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    Generally, when your IO period is up, your lender will offer to extend the loan for another IO period. If for some reason they don't, you can apply or threaten to refinance with someone else.
    I doubt you'll have a problem as long as you can service the loan.
     
    gad, 27th Jul, 2007
    #2
  3. drunkenguru

    drunkenguru Member

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    thx gad, are there normally any fees involved in extending the IO period?
     
    drunkenguru, 27th Jul, 2007
    #3
  4. gad

    gad Well-Known Member

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    Not that I'm aware of.
     
    gad, 27th Jul, 2007
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  5. spider

    spider Well-Known Member

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    IO


    I have a IO with St George that is for 15 years...I got caught in Canberra in the early 90's when the market went down like my dog's dinner. The unit was worth less than what I paid for it 5 years earlier..woooooo...
     
    spider, 27th Jul, 2007
    #5
  6. Jacque

    Jacque Jacque Parker Premium Member

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    I just tried to extend or renegotiate my IO term fixed rate (3yrs expired) and was told it would cost me a $600 fee to "re-draw" the mortgage docs :mad:

    Obviously every lender is negotiable, however, so make it known that you're not happy and you may well be surprised at what you get when you ask nicely :D
     
    Jacque, 27th Jul, 2007
    #6
  7. Nigel Ward

    Nigel Ward Well-Known Member

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    What's it worth now? :D
     
    Nigel Ward, 28th Jul, 2007
    #7
  8. spider

    spider Well-Known Member

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    Woden

    Nigel,

    It and the rent have tripled. I was max geared up at the time and after owning it for 5 years on an IO loan "the bank" revalued the property and would not extend the loan unless I placed the shortfall of the valuation into the loan. I did not want to sell down any shares and I had other properties in Canberra (all at Woden) which did not have much equity in them - there is a good lesson there about diversification. Anyway, I just got a personal loan for the shortfall with the loan fees being deductible as it was for investment purposes. Revalued a few years later and here I am...now in steak and kidney (Good old Sydney).

    Liverpool St
     
    spider, 28th Jul, 2007
    #8