P&I loan vs Interest only

Ive been using a fixed term interest only loan for my IP for many years. Each time the fixed term comes up i refix for 1 year or 3 years - whichever is most effective. This time around i thought i was again getting an interest only loan - only later to find the bank had put me on P&I. When i queried it, they say they are now regulation bound not to offer IO after 5 years. Does this sound correct?

Can i move to a different back to get IO again?

 

Extend the loan term back to 30 years too and the PI repayments may be similar to the IO repayments

 

Sounds like IO term has been extended on multiple occasions. Age may preclude the lender from offering a 30 year loan and further IO extensions.

 

U never know. I just got an 82 year old a 20 year loan

 

If you can refinance your loan and are eligible (val, serviceability, policy, etc) - then yes its possible to renew it. If not, you may be tied to your existing lender and your loan terms.

 

HI @D3xx - in theory, you should be able to extend IO again, but probably not with your current lender (or at least not without a full new application). Depending on your borrowing capacity and age, most people still have options unless they have very large portfolios.

 

Yes and not.

Most banks are in the process of changing to ten years 10 I/O with 2 five year term. Some may assess financials after 5 years...but most will not let you extend for after 10 years......a few will do it if you can service and have an exit plan (if you are over 50 you will need one).

 

30 overall?

And what recommended examples can one give for a 'defined exit strategy'?

 

His (or her) exit strategy would be self explanatory

 

I have just fixed a number of loans at 4.09% for 2 years P&I, repayments are significantly less than the variable P&I, and about the same as the IO repayment

 

So keeping IP loans as I/O for many years (e.g 10 years etc.) is better than 2 or 3 years because of set payments that can help with a cash flow or does it have any other benefits?

 

Super

 

I've just done the same with a couple for 3.99% P&I fixed for 3 years. It's slightly more than the variable IO, but not significantly.

 

@Rolf Latham - What was the Interest rate?

 

@DaveM @skater which lender did you get those rates with?

 

How easy is it negotiating back to a 30 year term for most banks?

Which is easier to negotiate? extend IO term or extend to 30 year Loan term?