Interest Only

Viewing 8 posts - 1 through 8 (of 8 total)

tuggerwaugh
Participant
@tuggerwaugh
Join Date: 2007
Post Count: 192
May 1, 2014 - 3:46 pm
G’day all,
Just a quick question. If I take out an interest only loan for the maximum 10 years (NAB) for an investment property over a 30 year period, do my repayments skyrocket at the end of the 10 years as I now only have 20 years to pay of the debt, as opposed to 30 years on interest&principal? Any info would be appreciated. Cheers
tugger
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
May 1, 2014 - 4:28 pm
You can just refinance the loan for another 30years and have it go bac to IO. Your bank shouldn’t charge you considering they will be getting even more interest of you :)
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
May 1, 2014 - 5:57 pm
Yes they would jump considerably – if you haven’t renegoitated. It is rare for a loan to go 10 years
But if it does just think what would your rents be like then? Possibly double
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 1, 2014 - 7:34 pm
It’s usually quite easy to mitigate. Just extend the IO term or refinance to another lender.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
May 1, 2014 - 7:48 pm
Yes your repayment will jump quote a bit as it will change to P/I one a 20 years repayment plan.
As mentioned you can refinance back to an I/O terms or back to 30 years etc..The only risk is that it’s depends on the lenders approval in 10 years time- i have seen plenty of case where the borrower is close to retirement age and the loan flips over to P/I and they struggle; trying to do an refinance to 30 years on other I/O term when your a bit older can be a nightmare for some ( Not all) so plan ahead as the lender needs to reassess your application again.
– Will you still have a job?
– Will have more liabilities or an reduce income?
– If your age suitable and financial capability suitable for an extension?
– LVR
Cheers
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Same Banks. Better Rates. Served With a Passion.
tuggerwaugh
Participant
@tuggerwaugh
Join Date: 2007
Post Count: 192
May 1, 2014 - 9:54 pm
Thanks for all the feedback guys. Much appreciated!! Cheers
Tugger
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 2, 2014 - 9:42 am
No probs, let us know how you go with the bank.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
May 3, 2014 - 10:23 am
Be surprised how confusing clients get when they get their letter of offer and it shows the massive increase in monthly repayment at the end of the interest only period as the calculation is based on the remaining term and the current principal balance.
NAB actually only do 5 year interest only terms but several lenders will do evergreen loans.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender