Question: Loan Repayments

Some of my investment loans are currently on a fixed rate of 4.09%. These loans mature late next month and I am fixing again at 3.79%; so I'm fixing at a lower rate.

On that note, will my monthly repayments automatically be reduced...due to my rate falling from 4.09% to 3.79%?

Cheers

 

Should be reduced

 

Automatically without prompting the bank etc?

 

I think it should be automatic in most situations. lower interest means lower minimum repayments payable

 

yes - should reduce but confirm directly with your lender.

Cheers

Jamie

 

Probably not relevant in this case, but with P&I variable loans, the ANZ doesn't automatically reduce the minimum repayments with a rate cut, you have to call them and request it. The logic is that the rate cut is an opportunity to get ahead on the repayments.

I'll admit that this policy was from quite a few years ago. It may have changed. It has been a while since we saw a rate cut after all.

 

+1. Was just going to say that I called ANZ to confirm the rate I was paying and asked if my repayments would come down commensurately. Not automatically was the answer - have to put in a request to reduce the minimum payment.

 

I have a loan with ANZ and just reduce the repayments on internet banking

 

sorry to hijack,
quick question,

have just negotiated with anz to reduce my interest rate from 4.54% var to 4.14 fixed for 3 years, both PI

according to the letter I got my repayments have gone from $460 down to $450,
just doing simple maths, the drop should be higher, I asked them to double check and they said yes correct, its because the loan term hasnt changed at 24 years, and this repayment figure will severely reduce if we reset it back to 30 years,

is this correct? sort of makes sense but doesnt to me

 

If you fix the loan term wouldn't change.

 

Understood.
But wouldn't the repayments go down by the % difference?
For arguments sake

$100k loan
Rate goes from 4.5 to 4%

That's a difference of $500 per year
/12 months is $42 difference?

 

Think your maths are off

 

How so?

 

Were you talking IO or P&I ?

 

Both PI,
am I wrong to assume the drop in repayments should be the difference in interest rate /12? give or take

 

$100k P&I Loan, repayments are $506.69 on 4.5% , $477.42 on 4.0% so only $29.27 a month

 

thanks DT, thats what I thought,

something wrong with my loan figs, need to call anz again

 

Get a loan calculator and work it out for both scenarios