NAB won't refinance due to 10 year I/O period policy?

Discussion in 'Loans & Mortgage Brokers' started by SupaRex, 29th Nov, 2017.

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  1. SupaRex

    SupaRex Well-Known Member

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    Hi All,

    I have four I/O investment loans with NAB.

    I'm going to be moving into one of the properties, so I want to make that one P&I and just adjust the loan amounts (ie: no extra borrowing).

    However, I had a call from one of the drones at NAB telling me that because my loans are due to change from I/O to P&I next year some time (all my loans have been I/O for about 9 years) they can't do the refinance.

    Surely I'm missing something here? I want to refinance and extend the I/O period on the three remaining loans (for as long as possible). My only alternative seems to be to move to another bank, which I can't imagine NAB wants. When I put it to the drone, I just got a long pause and no real answer.

    Please enlighten me (and help if possible!) my PropertyChat friends.......
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    You'll need to do a full refi with NAB or someone else to extend the IO period on the IP's.

    What do you mean, adjust the loan amounts on the new PPOR? You should be able to change to P&I no problem, but NAB are notoriously difficult to do much post settlement so if you want to adjust limits you're probably better off moving the whole lot and restructuring at the same time.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It's the way it is. Regulators expressed concern about the levels of I/O lending. One of the responses from the banks is that I/O loans being set up today are a maximum of 5 years, and they'll possibly extend another 5 years. After that, you're on P&I.

    Your only option is to refinance to another lender. The NAB isn't going to help, they won't refinance into another I/O period. In 5 to 10 years, you'll probably have the same issue again with the new lender.
     
  4. beachgurl

    beachgurl Well-Known Member

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    That doesn't make sense to me. It would be advantageous to NAB to have one of your loans moved to P&I so they can remove it from their I/O books. I'd have another crack and call again.
    As for the I/O loans, I agree that it's very tough to get an extension on I/O periods and you should consider going to another lender, on the condition that you have the serviceability to do so and your LVRs aren't too high.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Thats coz its nab also................

    ta
    rolf
     
  6. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Pretty sure there is a 2 page tick and flick form to convert IO to P&I without full assessment, more of a product switch.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I'm fairly certain that a lot of lenders are implementing 10 year caps on I/O periods. This isn't restricted to the NAB.
     
  8. imbi3

    imbi3 Well-Known Member

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    Would, say a top up on the loan make the bank consider it as a ‘new’ loan and the clock re-start?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    No. Top ups with the NAB and many other lenders keeps the same time parameters on a loan, they just increase the amount. They keep the same remaining I/O period and remaining loan term.

    Regulators have basically told the banks that eventually loans need to be paid off. This is one of the ways this instruction has been implemented.

    I think the only real option available is to refinance to another lender. At some point, even this might be problematic. Some lenders aren't doing I/O for refinances any more either.
     
  10. housechopper2

    housechopper2 Well-Known Member

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    Is extension of total loan period a full refinance process for all the big 4 too?
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    There might be some exceptions to this but yes, extending the loan period with any lender requires a re-origination of the original loan.
     
  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Are you simply wanting to convert from IO to P&I? If so - it's a variation form.

    If you're wanting to extend IO terms - then it will require a full app.

    Cheers

    Jamie
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should try to refinance from NAB and go back to a 30 year loan term.

    If you had extended another 5 years then when this is over your repayments would be PI based on a 15 year loan which would result in repayments which would be 2 to 3 times the IO repayment.
     
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  14. SupaRex

    SupaRex Well-Known Member

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    Thank you all for taking the time to respond.

    Perhaps a little more detail from me.

    As of right now, I have 1.2M in I/O only investment lending with NAB. I have four loans, each of different amounts, each secured by one property. I have plenty of equity, so that isn't an issue.

    I now want to move into one of the properties, so I want to change that loan to a P&I Owner Occupied loan.

    So I will still have four loans, each secured by one property, but one will now be P&I.

    I don't want to increase my lending, but I do want to change the distribution of the 1.2M across the four loans.

    To minimise the mucking around (LOL), the bank manager I was dealing with has applied to just "move things around a bit" rather than do a full refinance. This is where the problem has occurred. She is on her honey moon, I had a call from one of the (unhelpful) drones that said this lending isn't possible.

    Can I refinance the whole amount with NAB, and effectively take a new 30 year I/O loans (plus the one P&I)? Are there any other options to get this across the line while staying with NAB? If I have to move, then I will, but I'm familiar with NAB and how everything works and have everything set up nicely (until now).

    Appreciate everyone's contributions :)
     
  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Times have changed. Nobody is going to keep $1.2m of IO loans.
     
  16. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    You really need proper advice and not some pot luck at branch.
    I’d be surprised if servicing isn’t going to be an issue with that many 20 yr loan terms.
     
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  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes you could possibly stay with NAB
    refinance back to a 30 year term with a 5 year IO period.

    But why are you shuffling the distribution around?
     
  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Why not?
     
  19. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Refer to my previous posts. Switching one of the loans to P&I is a very simple variation.

    Exending the I/O periods is unlikely to occur with the NAB, you need to refinance to a different lender.
     
  20. SupaRex

    SupaRex Well-Known Member

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    I'm shuffling because the property that is to become my PPoR secures a loan bigger than what I paid for the property originally (due to past refinances). Since I'll be changing this loan to P&I and the interest will be non-deductible, I want to minimise the loan size. That means that the 'extra' from this loan should be shared by the other three properties. So I thought, while I'm at it, I'll make the loan amounts on the other three loans all about the same. My thinking was that would give me more flexibility if I ever wanted to move one of the loans to another lender.

    Unless I've made a huge mistake somewhere, which is possible......