Interest only Loan

I have been offered an Interest only rate of 5.3% with Cba. Is that a good rate. I am using equity from another property. Loan amount around $600k

 

Depends on the type of loan...it does seem high if its a standard resi INV IO variable loan. Usually borrowers get a bigger discount than that and rates are closer to mid 4% range.

 

The quick answer is no. It's not good. CBA have been doing better than this recently. CBA INV IO rate should start with a 4.XX.

 

I got my 2 years fixed IO offer for 4.24% and 4.27% with CBA for 500k loan amount. so definitely not good.

 

With 100% offset?

 

Nah it's rubbish.

They can definitely do you a sharper rate than that, turn the screws on them a little!

 

TBH, I don't understand the point of doing IO now.
It's about .3 to .4% higher than P&I
So if you don't care about cashflow, why would you pay the extra 2k for (500k) loan a year?

 

So justjto confirm guys the rates you are quoting for interest only does it have 100% offset

 

Yes - the rate you have for IO with offset is rubbish. It should be mid to high 4's, depending on your situation.

 

Ok thanks guys!!

 

Every business including investment property businesses should ALWAYS care about cashflow.

I can’t believe you said that .

It is $2,000 before tax. So, the cost is even less after tax.

I believe the slight increase in cost is worth the benefit gained, especially if your $625,000 property (loan of $500,000, LVR of 80%) goes up by $30,000pa to $60,000pa on average.

Do you understand the benefits of I/O with Offset vs P&I. My whole loan portfolio is I/O, most with Offset, with some fully chocked.

I wouldn’t touch P&I - the loss of benefits does not support my investment strategy .

 

No good, but they won't do anything about it until you present them a signed discharge form and another lender has booked in settlement.

 

I think this is for a purchase, from my understanding of the OP.

 

Yes it is for Purchase..Got the finance approval after lot of running around.What are my options now to get better rates? as i have to continue with same bank as only 30 days for settlement

 

Use a broker if not sure. 30 days is more than enough! You could get much better rates. Otherwise I would shop around and apply to another lender.

 

Just tell them you want them to do a pricing approval for you - they can do this without having to reassess.

They're probably x-coll the 2 properties too....

You do have time to go elsewhere but you'll want to move quick.

 

Thanks everyone.. Will contact broker again..

 

But cant understand why broker got me this rate.. Do they get paid more if my interest rate is higher?