Join Australia's most dynamic and respected property investment community

End of Fixed Loan Period

Discussion in 'Property Finance' started by dmb1978, 8th Nov, 2015.

  1. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    178
    Location:
    ACT
    Hello,

    I have never got to the end of a fixed home loan period before and I have 5 loans that are due to expire next month. I have been trying to get an appointment with my mortgage broker but not yet successful.

    My question is, will all the loans just revert to the basic standard variable rate on the anniversary date until I have time to re-finance?

    Also is there are separate variable rate for the investment loans/interest only loans?

    One of the loans for our PPOR is interest only. Do you think that it is wise to keep a smaller portion of the PPOR loan as P&I only to pay down the smaller portion faster or should i just get a P&I for the whole amount?

    All our loans are currently with the CBA Wealth Package.

    Thanks
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    They will revert back the SVR automatically - the SVR for investment is 0.27 higher than for PPOR. Depending on your total loan size you'll get a discount but do check they've applied it when it reverts.

    With your PPOR, it depends on your longer term goals as to whether IO or P&I is appropriate. However, if it will ever turn into an IP, IO is the way to go.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra and Sydney
    Hiya

    Loans will revert to SVR minus discount you have in place.

    As Jess said - there's a 27 bps difference between IP and PPOR loans.

    P&I or IO? It depends on your cashflow/longer term plans.

    CBA are one of the better lenders to deal with once fixed loans expire - if you'd like to re-fix/restructure/change anything - it doesn't usually involve an application process. It's generally done over the phone or via your broker.

    Cheers

    Jamie
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,014
    Location:
    Sydney
    It might be a good idea to stagger the expiry of the fixed rates too. Imagine if variation rates had increased by say 2%. It would be a sudden shock for all 5 loans to jump to 2% at the same time.
     
  5. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    178
    Location:
    ACT
    Thanks all. On closer inspection the fixed period expiry for December only applies to 3 of the loans. What I have also noticed is that the interest only period ceases at the same time. Do I have to do anything to keep it as interest only or will it just revert to SVR as interest only?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,014
    Location:
    Sydney
    Interest only expiry is separate to the fixed expiry. it may or may not coincide. if the IO period is expiring then your loan will revert to PI. You will need to apply to extend the period - many banks will want to fully reassess you at this point.
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    CBA won't need a full reassessment though, it's usually just a form to fill out unless you want to extend for 10 yrs. If just 5yrs, the form is fine.
     
  8. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    178
    Location:
    ACT
    Thanks, I don't want to be paying P&I on the investment so will have to get on that ASAP.
     
  9. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    863
    Location:
    Sydney (West) and Canberra
    Give CBA a call, you may be able to extend the I/O period out over the phone - their currently one of the market leader in terms of I/O extensions.

    You could also organise a discount if your discount rate isnt in line with the market. You can get pretty decent pricing if CBA deem you a retention risk (ie you could go to another bank) and they do decent discounts for existing lending.

    Cheers,
    Redom
     
  10. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    178
    Location:
    ACT
    Thanks, I called CBA and I can extend the interest only on the phone, so that's great. Now to get onto mortgage broker to figure out the best structure for the loans
     
  11. Jason Tyrrell

    Jason Tyrrell Well-Known Member

    Joined:
    8th Jul, 2015
    Posts:
    54
    Location:
    Sydney
    CBA this morning announced some 0.1-0.2% reductions to OO fixed loans so the timing is good.
    1-4 years 0.1%, with 5-year fixed declining to 4.59% (0.2%) which is reasonably competitive for that time period.
     
  12. benk

    benk Member

    Joined:
    8th Aug, 2015
    Posts:
    18
    Location:
    sydney
    How do you find out when the IO expires? Sorry if its a bit OT
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,014
    Location:
    Sydney
    It will be on your loan contract, sometimes on the statements of you can ring them up and ask.
     
    benk likes this.
  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra and Sydney
    Depending in the bank you might be able to find out via online banking. You can with Cba.

    Cheers

    Jamie
     
    benk likes this.
  15. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    178
    Location:
    ACT
    That's promising, thanks.