All Topics / Finance / IO loan on PPOR??

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  • Profile photo of happyjack72happyjack72
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    @happyjack72
    Join Date: 2005
    Post Count: 53
    May 4, 2007 - 12:56 pm

    Hi guys,

    This is probably a really basic question, but I have a friend who has a loan offer for a P&I loan to build his PPOR.
    He can make the repayments and the bank is happy with his serviceability, but his cashflow is a bit tight.
    There isn't any problem usually with requesting for an IO period on the loan for, say, the first 3-5 years?
    I've done this with a few of my IP's, but I wanted to make sure there were different rules for PPORs.

    Thanks,

    Profile photo of Mortgage HunterMortgage Hunter
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    @mortgage-hunter
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    May 4, 2007 - 1:32 pm

    No problems.  I chose to go Io on my PPOR with an offset account attached.

    Best structure in my situation.

    Profile photo of happyjack72happyjack72
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    @happyjack72
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    May 5, 2007 - 8:54 am

    Hi Simon,

    Thanks for that.
    Yes, I think having an offset would be a great addition.
    Can the offset have a redraw facility?
    Or does it depend on the lender?

    Profile photo of Mortgage HunterMortgage Hunter
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    @mortgage-hunter
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    May 5, 2007 - 11:06 am
    happyjack72 wrote:
    Hi Simon,

    Thanks for that.
    Yes, I think having an offset would be a great addition.
    Can the offset have a redraw facility?
    Or does it depend on the lender?

    Off set is just an account that you store money in.

    You can deposit and draw as often as you want for no cost.

    Profile photo of Kipper57Kipper57
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    @kipper57
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    May 5, 2007 - 1:39 pm

    Most loans with an offset attached have a redraw as well however why use the redraw when you have the offset

    Profile photo of CJWentworthCJWentworth
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    @cjwentworth
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    May 5, 2007 - 3:02 pm

    which bank/lenders offer a competitive interest rate, as well as a 100% offset loan?

    Profile photo of TerrywTerryw
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    @terryw
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    May 7, 2007 - 2:44 pm

    CJ

    Most of the major banks offer good rates and 100% offsets on the prof packages.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Finance FriendFinance Friend
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    @finance-friend
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    May 8, 2007 - 2:20 pm

    CJ, depending on loan size, a few good ones to look at:

    Bankwest  – 7.35% with 100% offset (7.30% for > $1m)
    ANZ One – 7.37% with 100% offset
    Westpac – 7.37% with 100% offset

    Also, limited lenders allow 100% offset on a fixed rate, 7.35% 3yrs, which interestingly enough also has a redraw facility (not common with fixed rates)

    Hope this helps.

    Rgds,
    Rob

    Profile photo of Richard TaylorRichard Taylor
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    May 8, 2007 - 9:31 pm

    Rob

    Anz Bank offer 100% offset on their 1 Year fixed rate which is unusual and there are a couple of major lenders that offer fixed rates with unlimited repayments and 100% offset.

    Best of all worlds.

    Richard Taylor | Australia's leading private lender

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