All Topics / The Treasure Chest / Prepay Interest

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  • Profile photo of SebastianSebastian
    Member
    @sebastian
    Join Date: 2003
    Post Count: 55
    June 4, 2003 - 4:51 am

    ello,

    How does prepaying interest work? I understand the tax advantages, but for example, if I have a P&I loan and prepay the interest for next financial year this year, does that mean that I will only need to pay principle payments for next financial year? Or do they contimue charging interest as per normal? Does it have any effect on the term of the loan??

    Cheers!

    Seb [:D]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 4, 2003 - 5:32 am

    Hi Sebastian

    Pre-payment of interest is only available on Interest Only loans and is only available if they are fixed for 1 year. This way nothing can change. Next June you will get another opportunity to prepay for the following year, or maybe change back to month by month.

    Terryw
    [email protected]

    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

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