Mortgage security swap and term deposit with P&I loan

Help, No one at ANZ seems to know the answer to this


I am in the process of doing a mortgage security swop on my PR but I haven’t found another property to buy yet.

I have a 6 month window to purchase another property and swop over the mortgage.

The mortgage is currently $527,000 and I am putting $527,000 cash into the term deposit to hold this mortgage meanwhile.

The cash in the term deposit will get minimal interest and we have to carry on paying the mortgage as per usual.

NOW, here is the part that no-one at the bank seems to know the answer to and can’t get their head around!

I am currently paying principle and interest, principle is $2000, interest is $360 approx, as currently have some cash in the offset account which will be transferred to the term deposit.

Scenario is :

Say i want to purchase tomorrow for $1,000,000, and the bank transfers the mortgage of $527,000 over, I need to pay the remaining $473,000 to purchase from the term deposit and the remaining funds sent back to me.

BUT, ANZ say that, because we are paying principle and interest, the principle part will be paid down off of the $527,000 mortgage that they are holding for us.

So, say it takes 3 months to purchase, we have paid $6,000 principle, but that means that we have less mortgage to take to the next property and so have to top up the balance even more.

If the purchase is $1,000,000 and $527,000 was original mortgage - $6,000( principle payment over 3 months), that leaves $521,000 mortgage to take to new property, so I then have to pay $479,000 extra for the purchase as opposed to $473,000, as well as loosing the $6000 already paid.

Am i missing something here?

Is it just unfortunate for me that I am paying principle and interest and have to swallow this to keep the mortgage open and loose the principle and interest payments?

If someone was on interest only and doing a swop they wouldn’t be paying down the loan. So the original mortgage amount wouldn’t change.

To me, paying down the principle only works if you have the asset, i.e the property at the time, which has a value.

I have had 10 conversations with ANZ and they just keep saying that i am paying down the mortgage with the principle.

Does anyone know the answer please? Am I MISSING SOMETHING?

 

DON'T SHOUT AND YOUSE SPEL CZECH!

 

Hi Rolf,

Thanks for answering. I appreciate it.