Renew Interest Only period PPOR - retired

Discussion in 'Loans & Mortgage Brokers' started by LongTermOwner, 19th Apr, 2020.

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  1. LongTermOwner

    LongTermOwner Member

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    Any insights on the likely ease or difficulty at present for a retired person to renew the Interest Only period on a PPOR loan? Low LVR, regular superannuation income, can afford P+I payments but prefer cash flow benefit of Interest Only. Paying 4.4% IO with major bank- would drop .55% if revert to P+I on IO expiry. Our significant offset account balance means interest rate is not as critical as otherwise.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Difficult for sure.
    Those rates though, are high, even the P&I rate of 3.85% is high
    When do you plan to pay the loan off?
    What's the loan balance?
     
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  3. LongTermOwner

    LongTermOwner Member

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    Yes am aware rate is rather high but there are no fees. Offset a/c is very handy. Balance approx 300k; plan to pay off loan on sale or death - no hurry either way!
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Definitely NOT in the Latter

    ta
    rolf
     
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  5. Lindsay_W

    Lindsay_W Well-Known Member

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    Even if you were paying fees you would be better off with a rate that's approx 1% cheaper.
    You've got money in the offset, do you live on this?
    If not, why not pay the loan off? What's the plan, dying isn't a sound exit strategy.
     
  6. LongTermOwner

    LongTermOwner Member

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    Thanks for your input. No we don't live on the offset balance but like to have a line of credit for urgent needs without having to go cap in hand to the bank or wait for a superannuation withdrawal to come through (for instance, the offset financed a new car last year but soon after was topped up from super). Another example is that longer term, people in our position might need an aged care deposit in a hurry in a situation where the partner staying at home may not be able to navigate finances quickly. And there is the more remote possibility of renting out the home in the future, in which case deductible debt is handy. In these circumstances, leaving loan exit until death does not seem a bad strategy.
     
  7. Lindsay_W

    Lindsay_W Well-Known Member

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    Ok so it's not looking good based on that response, I don't think any lender would touch this.
     
  8. LongTermOwner

    LongTermOwner Member

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    Thank you for the views and comments.