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End of IO period query

Discussion in 'Property Finance' started by NewySteve, 9th Oct, 2015.

  1. NewySteve

    NewySteve Member

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    My five year IO loan with NAB has come to and end and I have received the letters re now moving to P&I as well as the 0.29% markup info (what timing!).

    They advised that moving to P&I is automatic from the end of the month and the contract remains the same - I don't have to do a thing. However I just contacted NAB about doing another 3 year IO period and they say that I will need to do a new application if I wish to do so. I was hoping it would just be a quick changeover.

    Is this usual? If I have to do a full application I may as well leave it as is and test the market elsewhere, there is no incentive to stay with NAB, even though the loan has been there for 8 years.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yep - usual
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    With Nab that's standard practice. It sounds like the perfect opportunity to shop around and potentially structure your lending more effectively at the same time - if LMI isn't payable NAB are often best left till later due to their easy servicing.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Not sure on nab, but some lenders will give you the option to renew the io period without application.

    Otherwise you could look at refi elsewhere. A strategically thinking broker has the durations of these things in mind so that you're always moving forward and never getting stuck without a workable / allowable lender. Its a bit like chess really.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    NAB like most others require a full application to renew an IO period.

    The good news is, if you decide not to renew the IO period, you won't be subject to that 0.29% increase.
     
  6. NewySteve

    NewySteve Member

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    Thanks - easy decision then. Just let the P&I kick in but in the meantime source other lenders - a new app would be a bit of a pain as I have just ticked over 2 years ABN and my accountant is still to finalise my ITR.

    This loan is under 80% LVR, I have another investment loan with them in a similar position (80%), as well as a SMSF home loan. So it may be easier but probably worth shopping around?
     
  7. Redom

    Redom Mortgage Broker Business Member

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    Most require a full reassessment of your application. I suspect those that don't (CBA/Westpac) may move into line by the time the interest only period expires. The regulators really don't like this ...and a continual renewal of I/O terms is a very obvious 'no no no' from a prudential perspective.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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  9. Mick C

    Mick C Well-Known Member

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    CBA has already moved to full assessment for I/O after the 5th year.

    NAB - they always ask for full assessment, one of the most painful lender to deal with for all "post settlement" changes.

    ANZ - Has also moved to full assessment after the I/O period is up.

    Westpac and St george have made no changes ...in fact they are still pushing out 15 years interest only and are still renewing i/o for other 5-10 years no question ask.
     
  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    CBA you only have to say you're able to service whatever the P&I payments will be after the 5 yr extended IO term ends - only full assessment for more than 5 yrs. Unless it changed in the last week and I missed it?
     
  11. euro73

    euro73 Well-Known Member Business Member

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    and so it begins...