Low fixed rates vs long IO period

Discussion in 'Loans & Mortgage Brokers' started by Tattler, 9th Apr, 2020.

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  1. Tattler

    Tattler Well-Known Member

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    I am currently doing refinancing to ANZ from CBA to reset my 30 year loan period, as well as getting better rates. I have been offered with SVR or fixed options:

    OO P&I (around $420K): 2.19% fixed for 2 years, or 2.64% SVR

    Investment IO (around $1.66M): 2.69% fixed for 2 years, but revert to P&I after end of fixed period (ANZ!), or 10 year IO period at 3.2% SVR.

    Which one would you choose?
     
    Tattler, 9th Apr, 2020
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Neither :)

    If I could I would do it with CBA or WBC, IO roll goes back to remaining IO period, and you can volunteer to switch to PI for a couple of years and still retain your remaing unused IO period............at a time when you may personally want or need it

    In these times of flux, options are good to have

    Loans aint loans


    ta
    rolf
     
    Rolf Latham, 10th Apr, 2020
    #2
    hieund85 and Ardi like this.
  3. Tattler

    Tattler Well-Known Member

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    Thanks for that @Rolf Latham.

    My challenge is that I only have another 15 months of IO period (originally 5 years) with CBA before all my loans becomes P&I. Is it even possible to refinance with CBA with new fresh 30 year loan term as well as IO reset? So really the fixed rate I can do is 1 year and then come back with 3 months of IO left unless I apply another 5 year extension with CBA. How, easy is it to get another 5 year IO with CBA?

    Also according to my broker, WBC interest rate was not competitive compared to ANZ and NAB, as well as tighter service calculator. I am looking to pull as much equity as possible now before the expected lower valuation of houses. Hence the refinancing.
     
    Tattler, 11th Apr, 2020
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I assume your servicing is ok, the valuations stack up to sub 80

    You opportunity to your challenge is that CBA will likely do another 5 + 5 + 20

    But its a full new app and you may as well look at getting more suitable options for u

    WBC rates are ok, but are very slow at the moment.

    NAB is YUK..............I believe, same issue as ANZ fix IO for 2 years roll to

    Another option could be with CBA if you have IO for only 5 years. They would likley extend the IO period to allow a 2 or 3 year switch., BUT we dont like doing that because of the 23 yr PI repayment shock :(

    ta
    rolf
     
    Rolf Latham, 11th Apr, 2020
    #4