All Topics / Help Needed! / please help me decide IP to IO

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  • Profile photo of scottsscotts
    Member
    @scotts
    Join Date: 2009
    Post Count: 63

    Hi,

    Unfortunately I didn't start to educate myself until a few months ago, and I made the wrong choice by selecting IP.
    ING charge $250 to make the change (what a rip off really).

    I'm trying to decide whether it's worth while changing my loan from IP to IO.
    The property is currently my PPOR, however I plan to make it a IP in the next 3years.
    I have just applied for another loan (for a IP that requires reno, develop the backyard then sell the lot (hopefully the front house before the building starts).
    So its good to have as much as flow over the next 2 years as possible. 

    Using loan calculators I will free up $240.47 a month by switching to IP.

    Here are the details:

    Market value: $500,000
    Amount: $186,967.34
    Redraw: $7,517.50+
    Interest rate: 6.74%

    Can I get some advice of whether its worth spending $250 fee to free up $240.47 a month in extra cash flow?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    $250 ain't much. think of all the future tax savings you will get and what else you can do with the extra cashflow. Better still see if they can add the fee to the loan.

    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 scottsscotts
    Member
    @scotts
    Join Date: 2009
    Post Count: 63

    thanks for the input Terry…. anyone else??

    Profile photo of propertunitypropertunity
    Participant
    @propertunity
    Join Date: 2008
    Post Count: 136
    scotts wrote:
    Can I get some advice of whether its worth spending $250 fee to free up $240.47 a month in extra cash flow?

    You're kidding right?
    Spend $250 once to get back $240 per month for the next 5 years at least…….I don't think you need help with a decision like that :)

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