NAB - 0.29% for all interest only loans - IP and PPOR

Discussion in 'Loans & Mortgage Brokers' started by Mick C, 27th Jul, 2015.

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  1. jaybean

    jaybean Well-Known Member

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    I'm already with NAB but need to refinance to extend IO, so I suppose I fall in this bracket. Now assuming I get my application in before 10 Aug, am I good? Or does this mean it has to settle before the 10th?
     
  2. KDP

    KDP Well-Known Member

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    Normally has to settle unless you pay the rate lock fee.
     
  3. jaybean

    jaybean Well-Known Member

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    Oh how much is that usually? That sounds like a no brainer, unless it costs a fortune?
     
  4. KDP

    KDP Well-Known Member

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    0.15% of the loan from memory.
     
  5. jaybean

    jaybean Well-Known Member

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    Up front cost or added to the overall interest rate? If the latter, then surely it's a no brainer right if they're telling us in advance that it's going to go up 0.29%?
     
  6. Mick C

    Mick C Well-Known Member

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    Reminder:

    If your thinking of fixing your rate with NAB do it sooner rather than later. This ONLY effects interest only loans.

    Rate will be going up 0.29% as of 10th August....you got Wednesday 5th to lodge else you will run out of time.

    1. I suggest you rate lock for a once off 0.15% you save 0.29% EACH YEAR!

    How? Process

    1. Call/email your broker and they can action by filling in the modification form.

    OR

    2. Call 13 22 18 and they will fax/email you the form.

    Risk of fixing

    I wont go into a full splil...but. Fixing means.

    1. There is a BREAK cost if you sell or refinance

    2. Reduce your chance of equity release

    3. Not flexible

    4. No offset
     
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  7. jaybean

    jaybean Well-Known Member

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    This is why I'm only fixing 90% on all of mine.
     
  8. Mick C

    Mick C Well-Known Member

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    That's a different process than...you better do it NOW!!!
    It's a FULL modification application with payslips etc...takes a few days as well..
     
  9. KDP

    KDP Well-Known Member

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    I did this and they said it was just a service request. The full application was only if I wanted to extend the interest only period.
     
  10. jaybean

    jaybean Well-Known Member

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    Yeah I thought it was just IO extensions that needed this? I'm going to call them within the next 10 mins...
     
  11. kennyboi

    kennyboi Well-Known Member

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    Hi,

    Does anyone know if there is any negative impact to my future investment borrowing by switching on a IO loan to a P&I loan on my PPOR?

    My PPOR loan is 5 years IO with 1.3% discount, and thereafter P&I with 0.5% discount. If I switch to P&I now 2 years into the loan, do I still get the 1.3% discount, or will it change to 0.5% discount making this exercise not worthwhile?

    Does switching involve a full application at all?

    Thanks
     
  12. almostthere

    almostthere Well-Known Member

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    I would like to know this as well.
     
  13. Mick C

    Mick C Well-Known Member

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    Depends on the bank...but short answer is - It will Reduce your borrowing and servicing for sure.

    CBA/ ANZ etc...No impact as they service on P/I anyway.

    NAB/ Adelaide bank/ Firstmac and some smaller bank - they still service and accept I/O ( loaded in some cases)
     
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  14. poeter

    poeter Active Member

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    Are "rate locking" and "fixing" the same thing?
     
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  15. KDP

    KDP Well-Known Member

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    No. Fixing is keeping the same interest rate for the specified period and rate lock means that you're able to have that interest rate even if the bank changes the rate before settlement.
     
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  16. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Some banks service better with I/O, some better with P&I. Depends on the lender. There's been a big shift lately towards P&I being the preferred repayment type.

    Can't say I've heard of a lender changing discounts after an I/O period, the initial discount is usually applied for the life of the loan unless it's a honeymoon period (which are rarely 5 years). Which lender and product is this?

    Switching rarely requires a full application.
     
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  17. kennyboi

    kennyboi Well-Known Member

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    It's a standard variable home loan direct from NAB. The loan contract said during the first 5 years of IO period the discount is 1.3%, after IO, it change to P&I and discount is much lower at 0.5%.
     
  18. poeter

    poeter Active Member

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    I've got the same statement on my contract letter.

    I asked the NAB lender why the letter is phrased this way. And he goes to me that I can call up the back in 5 years to get it refreshed and the full discount will still be there. It's just the template which NAB uses.

    Is he pulling my leg on that one?
     
  19. Mick C

    Mick C Well-Known Member

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    Of course his pulling your leg...

    1. It's a WRITTEN contract

    2. The market is changing...of course they can say no in 5 years time

    3. ALL of the NAB contracts i seen have X% for the life of the loan.

    4. Whats stopping him from saying no more discount in 5 years time?

    5. Banker might not work there anymore in 5 years...


    Note point 1 and 3....which im sure most bankers and brokers will agree.