We had locked our Interest rate 1 and half year back at around 7.65% for 3 years i.e. until June 2010. Our circumstances have changed recently and we are on a single income which is making things difficult for repayment. We have saved some during our good times and it is helping us for the time being.
I contacted the Bank was told that I had to pay to break the Fixed term which is huge around 15-20k. I am sure there are many other people who are in a similar boat. I would really appreciate any advice or suggestion in regards to helping us in this situation. Thanks in advance everyone.
There is nothing you can do other that to ride it out or pay the break fee.
So I would sit down and work out how much interest you are going to save if you were to go variable now. Work out any tax deductions for the break cost and see how long it would take you to recoup your money – then determine if you want to take the risk of breaking.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Check whether you can make any repayments against the loan at all – some loans do allow for some level or repayment each year.
Thanks for the advice Terry & TheBish. I have calculated the difference and it seems to me that I will paying a lot more in the longer run. We have only one source of income which makes it nearly impossible to do any extra repayments after all the living costs. I think I will have to take a risk of waiting and hoping that we have 2 source of income soon.
Cheers.
Hi guys,
I just found out something today from my mortgage broker that I thought was quite interesting.
Not sure if any of you have heard about it.I have a couple of fixed loans secured by one property, that I would like to put on the market to off-load.
And the usual story … bank charging exorbitant fixed rate break penalties, using some "secret" formula that they don't disclose to anyone.
When I asked my mortgage broker for options if I decided to sell the property, he said that the fixed loans were "portable".
Meaning they could be "moved" to be secured by another property, as long as there was sufficient equity in the property to carry those loans.
Thankfully these loans are small ($74,100 and $31,600), and I do have one investment property that I have sufficient equity in.
The only down-side is that I'm looking to sell that property soon this year.That being the case, I may end up securing those fixed rate loans against my PPOR, which currently has a couple of LOCs to the maximum amount of remaining equity.
So, the limit on one of the LOCs would reduce down by $105,000 to accommodate the two small fixed loans.
And, then I can let the loans run their fixed periods until 2010, and then pay them out as soon as they mature.Anyone heard of fixed loans being "portable" like that?
Peter
Yes Peter there is nothing new there.
The security upon which the loan is based on is neither here nor there as it the Loan contract itself which is important.
If the lender was prepared to lend against cash then you could probably sell the house and give them the balance of the sale proceeds as security for the outstanding debts. All they would want is 100-125% of cover in cash but would save you an ERP.
Richard Taylor | Australia's leading private lender
Yes Peter there is nothing new there.
The security upon which the loan is based on is neither here nor there as it the Loan contract itself which is important.
If the lender was prepared to lend against cash then you could probably sell the house and give them the balance of the sale proceeds as security for the outstanding debts. All they would want is 100-125% of cover in cash but would save you an ERP.
Richard Taylor | Australia's leading private lender
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