Back to IO or fixed in today's market?

Discussion in 'Loans & Mortgage Brokers' started by TMNT, 25th Jul, 2017.

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  1. TMNT

    TMNT Well-Known Member

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    So a fair few of my IO loans are being automatically changed to pi soon. Cashfloe wise it's going to be more pressure.
    All my rates are about 5.5%. And I want them we'll below 5 unless its fixed

    Assuning I'm not going to sell any

    What would people recommend to do.

    Fix for 2 to 4 years?
    Go back to IO

    I don't want to apply for new loans so I'll stick with existing lenders

    What's the general consensus/recommendations.

    I am aware that there are a lot of articles saying many rate rises coming up. Which I agree to a certain extent
     
    TMNT, 25th Jul, 2017
    #1
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Depending on your lender, you may be able to fix P&I for 3.88%ish - if you're about to revert anyways, you may as well lock in a low rate.
     
    Jess Peletier, 25th Jul, 2017
    #2
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    dont want to ?

    or like many of my stretched peops

    cant ?

    ta
    rolf
     
    Rolf Latham, 25th Jul, 2017
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  4. RetireRich101

    RetireRich101 Well-Known Member

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    maybe mix the equation a bit.

    identify the properties you're like to keep longer, fix them for 4 years on IO
    and rest mix fix for 2 and 3 years on P&I.
    As Jess said, competition with major bank on the 2 years fixed P&I product..once they fill their books they will go back to 4%+
     
    RetireRich101, 25th Jul, 2017
    #4
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If cash flow is an issue you might have to sell one or two properties.
     
    Terry_w, 25th Jul, 2017
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  6. TMNT

    TMNT Well-Known Member

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    Thanks everyone
    I was a bit surprised at some of the fixed rates being so low. With market sentiment being towards rate rises coming up. I would have thought fixed rates go up first
     
    TMNT, 25th Jul, 2017
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  7. samiam

    samiam Well-Known Member

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    I fixed at 3.88% P&I, $500 more per month for 700k loan but saving $6000/yr in interest. Only got that rate for 2 years though @ Westpac
     
    samiam, 25th Jul, 2017
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    generally fixed PI rates for IP are yet to feel the sting of the APRA whip.

    ta
    rolf
     
    Rolf Latham, 25th Jul, 2017
    #8
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    If you're currently paying above 5.5%, then 3.88% P&I (which quite a few lenders are offering) will possibly put you in a better cash flow position with the added bonus of reducing debt.
     
    Peter_Tersteeg, 25th Jul, 2017
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  10. +men

    +men Well-Known Member

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    I would start calling bank and request IO extension...If the answer is no, then fixing P&I now below 4% for 2-3 years seems to be the best option
     
    +men, 25th Jul, 2017
    #10
  11. TMNT

    TMNT Well-Known Member

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    Wouldn't fixed be better on the assumption that there will be a few rate rises in the near future?
     
    TMNT, 25th Jul, 2017
    #11
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Sure, that too.

    The attached calculator is an easy way to figure out various cash flow scenarios.
     

    Attached Files:

    Peter_Tersteeg, 25th Jul, 2017
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  13. Elives

    Elives Well-Known Member

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    why are you rates so high? "5.5"?
     
    Elives, 25th Jul, 2017
    #13
  14. Maadha

    Maadha Well-Known Member

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    Nice calculator. Thanks for the share!
     
    Maadha, 25th Jul, 2017
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  15. TMNT

    TMNT Well-Known Member

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    Just got off the phone to macquarie
    do these sound right?
    My current rate is
    5.39
    INTEREST ONLY
    Fixed 1-2 4.79
    4yrs 4.99
    5yrs 5.09
    var 5.51

    PI
    var 5.06
    PI fixed 1-2 4.54
    PI 3yrs 4.5
    PI 4yrs 4.74
    PI 5yrs 4.84

    Assuming youre not goign to sell it seems maybe 3 years is the best,
    oh and they did say going back to IO would be a full reassesment,
    obviously with PI the repaymetns would also jump

    Amp variable was 5.69 w a $350 fee to change
    Pi fixed are all about 4.6 for 1 to4 years and 5.19 for 5 yrs
     
    Last edited: 9th Aug, 2017
    TMNT, 9th Aug, 2017
    #15