My Experience with Renewing I/O Only Loans

I can help you put it to good use.

After spending many months of trying to get many things over the line, and failing, literally less than a week after going to contract, 2 others were offered.

 

We have 3 houses plus ppor that have reverted to p & I , its really not such a bad thing in the current lending environment especially when they still cover their own way.

All the others remain on IO. Some of those are with westpac who was fairly easy to renew with last i heard; though the rules seem to be changing regularly.

 

Say you've had IO for the first 10 years of a loan. Bank says sorry no more IO renewals, you must pay the remaining 20 years @ P&I. If this is too difficult, which it may be by then for more than a few overexposed investors, why not just refi to a fresh 30 year P&I term? Provided you qualify of course.

 

60% of my loans with St George or Westpac...and they are I/O only for 15 years......they are great to deal with.

The opposite to this is the CBA....horrible pain in the arse...ok for approvals of I/O extensions...but very combative on rates..and arrogant and poorly trained staff who all seem wet behind the ears.

 

That all suits me perfectly then. Westpac IO easy to renew and one of the ones we're selling is with cba, so stuff 'em

 

See if you can get reassessed and convert to 10 yrs I/O upfront...big changes coming in this front...Westpac now only does 10yrs I/O

 

Trying to avoid reassess as circumstances have changed. Not due yet, and get another 5 years when it is. Rules will probably have changed again by then anyway, and investments should well and truly cover themselves even as p&I by then.

 

Lol I went 10 years IO with a big 4 bank last year. On a huge discount too. If this was a bond I would be able to sell it and arb it

 

I wasn't sure to make a new thread, but thought this would be relevant here.

My current loan situation:
Loan A - St George - 1y 8m into loan
Loan B - St George - 2y 1m
Loan C - St George - 0y 6m
Loan D - Westpac - 1y 3m
Loan E - Liberty - 0y 2m

All are new loans, have not renewed in the past.

Should I renew all of them or some of them?

If I renew all of them, in 5 years time all may revert to PI loans and I'll be hit hard with the extra repayments.

Or

Renew some of them? Spread out, gives me time to renew one by one / refinance if needed.

Spoke to St George lender today and he said it's very easy to extend IO loan, just need to text him or email him the instructions and its done.

I feel like my text can cause a butterfly effect!

What would you do?

 

St G and WEstpac are still offering 10 year IO loans. Try and get it extended now if possible.

 

I'm not a broker but I would think you should try to renew all of your IO St George Bank loans now, especially if your lender has made it so easy for you - you may not have this option in 6 months time... as you say, it gives the opportunity to spread out the repayments.

 

I have a question for the brokers but also didn't want to create a new thread...

If I were to apply for a new home loan within the next 9 months, would IO not be an option any more? Or could I still apply for 5 years IO?

 

It should be still available as interest only, but much harder to get for owner occupied loans and there may be higher rates.

 

Yes a ticking time bomb.....in particular Sydney where a lot of OO also went I/O banks will pull this first..if they bought late in the cycle that will sink them....

Yep...so did I over 35% are 15 years I/O....another 35% are 10 years I/O remaining are 5 years renewable either 10 years or 15 years

 

So as someone starting out now should they be trying to get 10 years terms on IO for their IP? PPOR equity is already pulled (4 months ago) and on 5 year term.

 

It all depends on servicing. Generally the longer the better

 

It is only certain lenders doing 10 years or more, even the ones supposed to be doing 10 list 5 on docs & I was told they will give another 5 when that expires, but frankly I think this is wrong if it is not on the loan docs. And now policy is changing.

You can ask, but the message is, start thinking of P&I and paying off the loans.

 

Spoke to STG today.
Got my I/O period extended until 2025 (loan established 2015 < 500k) with little pain. Just call and request and it's actioned instantly.
If wanting a discount on current rate call the retentions line which is 1300 302 302 between 8am-8pm. Small team of very knowledgeable staff averaging 12 years in exp (so I'm told).

My current rate is 4.37%.
Best they could offer is 2 years fixed @ 4.19% (if on advantage package) but you lose your current discount once the fixed period expires. I'm currently on 1.3% disc. which is much better than the 0.7% advertised on the site right now. Retentions operator said the best she is allowed to do atm is 1.1% max and that's only for loans > 500k.

 

Spoke to CBA yesterday. All loans with them are less than 18 months old with some less than 6 months old.
Got some student operator doing everything he could to avoid extending my loans out because 'it doesn't benefit me in any way'. Seemed to me the process is a bit tedious and he was trying to avoid at all costs.
Requested to speak to the supervisor and he was happy to action the request but advised it would be better for me to go into the branch as this would allow me to extend I/O period to 10 years. Only extra step is filling out a form.
He did not mention I would be re-assessed via this process.
Lucky I ran this through my broker and he confirmed any 10 year request will come with re-assessment.

Called up again today and got some loans maxed out to 5 years but the process is not as easy as STG.
They have to read you a disclaimer before they switch the loan to P&I and back to I/O to get the max 5 year term.
This should be confirmed by docs to come in the mail.

Other option is to call them, advise them of all the loans you want to amend and then have the disclaimer read. At this point you can tell them to action the request and call/email you back once it's completed.