Join Australia's most dynamic and respected property investment community

Changing from P&I to IO

Discussion in 'Property Finance' started by Burnhi, 12th Jan, 2016.

  1. Burnhi

    Burnhi Member

    Joined:
    18th Jun, 2015
    Posts:
    5
    Location:
    Perth
    Currently going down to one income as my partner and I are having a baby, for cashflow I thought I would change my fixed rate loan on an investment property to IO. The only reason it was P&I in the first place was I forgot to tick a box for IO previously.
    I always thought banks were easy to make a small change, but ING were really nasty!
    To change the loan, they want a new valuation fee and a switch fee. :(
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    Your loan is fixed, so that would make things more difficult. Not sure why they want a new valuation.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,161
    Location:
    Canberra and Sydney
    They sure are :-(

    But cheap rates though.....
     
    albanga likes this.
  4. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    897
    Location:
    Melbourne
    fixed means fixed. You can break the fixed rate, but that costs money, and if you do you will then essentially have to apply for a new loan, either with ING or a new lender.


    The break costs are tax deductible, it may be worthwhile investigating breaking the fixed rate, changing to IO, topping up the loan to pay fixed interest in advance. You can then bring forward a larger tax deduction while you are both working, and have better cash flow while you are down to one income.
    Obviously take specific tax advice from your accountant.
     
    albanga likes this.