Change to PI worthwhile?

Discussion in 'Loans & Mortgage Brokers' started by Tink, 16th Jul, 2017.

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  1. Tink

    Tink Well-Known Member

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    We just received an update from RAMS our Variable IO rate has gone up at end of June to 5.44% which seems ludicrous in this rate cycle (thanks APRA)

    Would it be worthwhile looking at P&I (variable or fixed)

    It is probably near 5.44% they are moving us to as a comparable rate
     
    Tink, 16th Jul, 2017
    #1
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  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I dont know your personal circumstances..........

    one thing to be aware of is that if you do move to PI, most lenders will want a full app to move back to IO

    ta

    rolf
     
    Rolf Latham, 16th Jul, 2017
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  3. Redom

    Redom Mortgage Broker Business Plus Member

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    For a $300k loan, you can have a modest ~$50p/m increase in repayment and switch to P&I with some of the better short term fixed offers on market at present.

    If you can switch to a rate beginning with a 3.XX at P&I, the interest saving should > marginal cash flow difference.

    The answer depends on:
    - difference in rate & repayment
    - ability to switch to lenders that tilt the difference in rate & repayment in your favour
    - medium term borrowing aspirations and whether additional repayments will hurt these goals
     
    Redom, 16th Jul, 2017
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  4. Jess Peletier

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

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    Deciding whether to move to P&I really requires specific advice as if you get it wrong it can impact your ability to buy in the future. There's quite a lot to consider over and above rate.
     
    Jess Peletier, 16th Jul, 2017
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  5. Redwing

    Redwing Well-Known Member

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    Have had similar, now looking at options
     
    Redwing, 16th Jul, 2017
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