Hi all,
A recent discussion re whether going from an IO loan to a PI loan would help serviceability led to an interesting discussion. From a MB’s perspective, it seems that a lender will only approve an IO loan by calculating it as though we were paying PI (Principal and Interest) and at a higher rate (Qualifying Rate). i.e. The lender needs…[Read more]

Hi Tobyn,
First off, I am not an adviser, but I might be able to point you to one….. Your situation sounds a little complex, but those “in the know” can usually point us in the best direction. Perhaps one or two of them might pop in…..

But for now, try…[Read more]

Thank you, gents.
With the extra help from you, I think I now “get” the whole picture. And, reading back, the first two replies said it all anyway – i.e. that even if you are paying IO currently, the initial borrowing was only granted because the lender deemed your total “free” income allowed you to make repayments even when you later change to…[Read more]

Thank you, gents.
With the extra help from you, I think I now “get” the whole picture. And, reading back, the first two replies said it all anyway – i.e. that even if you are paying IO currently, the initial borrowing was only granted because the lender deemed your total “free” income allowed you to make repayments even when you later change to…[Read more]

Thank you, gents.
With the extra help from you, I think I now “get” the whole picture. And, reading back, the first two replies said it all anyway – i.e. that even if you are paying IO currently, the initial borrowing was only granted because the lender deemed your total “free” income allowed you to make repayments even when you later change…[Read more]

Hi Terryw,
Well, I didn’t know the following – suddenly what you say makes sense.

Yes the cash flow consequences would be entirely different, but here we were discussing serviceability. The lenders will treat any IO loan as if it was a PI loan.

So, if a lender treats either loan similarly from a serviceability perspective, then that…[Read more]

Hi Terry,
I see what you mean, where a shorter term is increased to a longer one. But I think we are walking up different roads here nonetheless…. The point I was aiming at is that a PI loan REPAYS the total over a defined period. True? Now, if it 20 years, your repayments must be larger, or less if a longer term loan (30 years).

But…[Read more]

Hi Terry,
I see what you mean, where a shorter term is increased to a longer one. But I think we are walking up different roads here nonetheless…. The point I was aiming at is that a PI loan REPAYS the total over a defined period. True? Now, if it 20 years, your repayments must be larger, or less if a longer term loan (30 years).

But…[Read more]

Hi Terry,
I see what you mean, where a shorter term is increased to a longer one. But I think we are walking up different roads here nonetheless…. The point I was aiming at is that a PI loan REPAYS the toal over a defined period. True? Now, if it 20 years, your repayments must be larger, or less if a longer term loan (30 years).

But…[Read more]

Hi Deepak,
The loan amount must have a bearing too – e.g. if you changed a 30 year IO loan for $800k over to IO, the payback of $800k must be taken into account. It would increase repayments by an average of $2200 a month. But if the loan was just $300k, then less than $850 a month is added to IO payments.

Also, what interest rate…[Read more]

GST was meant to signal the end of Land Taxes and Stamp Duties, wasn’t it? Would’ve been good !!!

Oh, and do check on Land Tax in YOUR State if you are considering buying an IP in a Trust. Qld at least has a different algorithm for a Trust-owner – and it hurts big-time!!

Benny

GST was meant to signal the end of Land Taxes and Stamp Duties, wasn’t it?

Would’ve been good !!!

Benny

Hi Bec,

Ideally I’d love to learn how to be my own mortgage broker. Is that possible?

I’m sure it would be possible, but that would happen better if you were dealing with someone who has a wide knowledge of Broking in the first place. Terry, Richard, Ethan, Jamie and George have all shown they know the “ins and outs” of broking to a very d…[Read more]

Hi Terry,

borrow against your existing house at the same bank for the deposit and costs. Make sure this is done via a separate loan.

Then borrow 80% secured on the new property, ideally at a separate bank.

Result = 105% loan without cross collateralising securities giving maximum asset protection and deductibility of interest.

That works well…[Read more]

Hi Terry,

borrow against your existing house at the same bank for the deposit and costs. Make sure this is done via a separate loan.

Then borrow 80% secured on the new property, ideally at a separate bank.

Result = 105% loan without cross collateralising securities giving maximum asset protection and deductibility of interest.

That works well…[Read more]

Hi Molly,
With a few of the “numbers”, some thoughts become a little clearer. I am guessing that the first two properties have some mortgages and I’ve assumed 80% LVR. If anywhere near correct, then that tells me that Tannum Sands is the one causing the most bleeding. Your current portfolio up there must be costing you plenty each week.…[Read more]

Hi Molly,
Ouch !! I would be interested to hear thoughts from others too. Meanwhile, can I encourage you to add a bit more info (vague if you like, but as near factual as possible) so that the bigger picture comes into view.

e.g. are you renting 4 properties currently, for what rents, vs what mortgages, and what are estimated values.…[Read more]

Hi Bec,
It may be you have come across this already, but if not, I didn’t want you to miss it, as the post linked below guides you to other threads that get into “What does and doesn’t work with x-coll!”

https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697974

Benny

Hi Valluvan,
As Terry has indicated, there are MANY more things to consider before making a call one way or another. As just one more example to think about, I could argue that living in your newly-built PPOR for 2 years, then SELLING it, might turn out to be a far better option than keeping it as an IP. But you would need to confirm that…[Read more]