Hi all,
I was just wondering what sort of complications there are with converting a P&I loan to an IO loan.
ie: What are the costs, Is there much extra paperwork (ie: servicability re-assessment), Are there any differences between converting Fixed P&I –> IO or Variable P&I –> IO? What are the implications for this sort of conversion between two different lenders?
Thanks in advance,
Steve.“Knowledge is Power”
Steve,
Contact your lender and request it. They will examine your serviceability as when yhe IO term expires the repayments will be higher again as a result of the lessened term.
There will be costs if you decide to change lenders. Only consider this if the savings are warranted or you have another good reason.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Simon!
They will examine your serviceability as when the IO term expires the repayments will be higher again as a result of the lessened term.When you say “as a result of the lessened term”, do you mean the term of the original P&I loan?
eg: 25 yr P&I being paid for 5 years, then take IO for 5, then there is a “lessened term” of 15 yrs left?
Also… is there any difference between converting Fixed to IO or Variable to IO?
“Knowledge is Power”
You are correct in the lessened term part.
Changing fixed is a lot different. If your fixed rate is above the current rate they will charge you to get out of it. If on the low side then it will be easy enough but would you want to do this?
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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