Interest Only loan expiring, can extend or need refinance with new bank?

Discussion in 'Loans & Mortgage Brokers' started by money, 31st May, 2018.

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  1. money

    money Well-Known Member

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    We have an interest only loan on an investment property with Westpac which will expire beginning of 2019, then it converts to a P&I loan. We also have an offset facility with them where all income goes into, which offsets that loan.

    Is it usually possible to extend the I/O period with the same lender, or refinance with the same lender, or do we need to look for a new lender to refinance with?
     
  2. Terry_w

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

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    Yes if you can service you could extend IO period
     
  3. Jess Peletier

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

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    With WBC it’s a new application these days to extend. If you can no longer service with them you’ll need to look at some of the more generous lenders.
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    if its a HOME loan with WBC

    best of luck :)

    you will have to move to lender x that is still ok with IO on ppor

    ta
    rolf
     
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  5. MRO

    MRO Well-Known Member

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    Does the same apply with a St George loan. I have an interest only expiry date in Jan 2019
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    typically needs full application

    ta

    rolf
     
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  7. MRO

    MRO Well-Known Member

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    Thanks Rolf. I will call St George direct to confirm. I might need to give some consideration to what i do with this property.
     
  8. MRO

    MRO Well-Known Member

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    Just called St George - there is no option, computer says full assessment required. The tough decision whether to hold or sell has just got a little bit easier
     
  9. property world

    property world Well-Known Member

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    What about CBA?

    What lenders are a little more lenient to extensions for IO investment Properties?
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    predictable

    ta
    rolf
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    depends ...........

    if u get to the end of the10 years with cba needs a full app as well
    ta
    rolf
     
  12. property world

    property world Well-Known Member

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    What are some dependants?

    Lamen terms
     
  13. Lacrim

    Lacrim Well-Known Member

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    In the new world, would one be able to extend a loan for another 10 yrs IO with the SAME lender if they passed serviceability?
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    yes, but quite a few lenders wont renew an IO period once exceeded easy to move to another lender

    ta

    rolf
     
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  15. Terry_w

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

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    best to move to another lender and restart with a new 30 year term.

    Imagine the difference in repayments for a 15 year PI loan v a 25 year PI when they revert.
     
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  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    If u have expired the maximum loan term for your existing lender you will need to re apply and meet current rules around income and valuations and expenses etc

    Hard to provide anything beyond that without specific data

    perhaps seek specific broker/lender advice

    ta

    rolf
     
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  17. Redom

    Redom Mortgage Broker Business Plus Member

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    As a generality, IO expiries trigger:

    - Swap to P&I if left as is, with higher repayment.
    - Re-assessment to keep IO, similar to a full application process with most lenders, with loan term remaining as is (problem technically gets bigger, but down the road).
    - Refinance to alternative lender with new loan term, either at P&I or IO.

    To avoid all of the above, you can sell.
     
  18. MRO

    MRO Well-Known Member

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    My problem, like a few others, is the under the new lending requirements i probably wont pass the servicability test.

    Unfortunately the problem loan is linked to the property I cant sell (long term development) and the other property i may sell is a positively geared place that I would rather retain.

    I will probably just start paying some principle and adjust my lifestyle expenditure.