Senator calls for PI IP loans to be allowed to convert to IO

Discussion in 'Loans & Mortgage Brokers' started by Rolf Latham, 6th Apr, 2020.

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  1. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Last edited by a moderator: 6th Apr, 2020
    Rolf Latham, 6th Apr, 2020
    #1
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  2. spludgey

    spludgey Well-Known Member

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    Link not working for me.

    If it extends the life of the loan, I'm all in. If it increases principal repayments for the remainder of the same term, I'd have to think about it.
     
    spludgey, 6th Apr, 2020
    #2
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Trying to rescue many from the repayment shocj opf 10 years IO to 20 PI right now.

    Many dont have the lux of a choice

    ta
    rolf
     
    Rolf Latham, 6th Apr, 2020
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  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    Personally, I'm yet to see any problems for my tenants in paying rent - one is a doctor and another is on centrelink. Even if I do have some of my other tenants lose their ability to pay, I have multi-tenant properties, so I'm unlikely to lose all of my income.

    I am likely to be able to afford to pay IO for a while, but continuing on P&I could become problematic. I'd rather not capitalise interest if I can avoid it.

    So if converting my P&I loans to IO temporarily is an option, it is something I would be keen to consider if I needed it.
     
    Simon Hampel, 6th Apr, 2020
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  5. Andy Kelly

    Andy Kelly Member

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    My Investment Property Loans converted from I/O to P&I two years ago and have really stretched me, some of my tenants have now lost their jobs so it is going to impact my cashflow. I want to go Interest-only, my bank didn't allow this in the past but do you think the banks would now look at it given the pandemic. I don't want to be hit with massive catch-up principal payment at the end of the 6 months principal holiday. Has anyone gone to I/O and got term extended recently?
     
    Andy Kelly, 6th Apr, 2020
    #5
  6. big_ben02

    big_ben02 Well-Known Member

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    big_ben02, 6th Apr, 2020
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    NAB had already released a 1 year IO stretcher a while back

    ta
    rolf
     
    Rolf Latham, 6th Apr, 2020
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  8. MTR

    MTR Well-Known Member

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    MTR, 6th Apr, 2020
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  9. Jess Peletier

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

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    We're still doing this for our clients no worries atm - but we are seeing restrictions to income so it depends on your line of work more than anything right now!
     
    Jess Peletier, 6th Apr, 2020
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  10. ChrisP73

    ChrisP73 Well-Known Member

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    Same. Dentist. Chef. Unknown. No issues. Ahead on rent actually.
     
    ChrisP73, 6th Apr, 2020
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  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    apra limitations, or at least lender perception of

    ta
    rolf
     
    Rolf Latham, 6th Apr, 2020
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  12. Andy Kelly

    Andy Kelly Member

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    Hi Rolf I'm with Choicelend (NAB) so I don't think the IO stretcher is available to me, and they said that even though ASIC are advising the bank will not be disadvantaged or penalized by allowing investors to go interest-only, Choicelend (NAB) has still not changed their policies or procedures yet. Would be interested to know if anyone's bank allows this.
     
    Andy Kelly, 7th Apr, 2020
    #12
  13. Omnidragon

    Omnidragon Well-Known Member

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    Never heard of this guy - won't happen.
     
    Omnidragon, 7th Apr, 2020
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  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    watch this space

    just needs apra to throw the switch

    ta
    rolf
     
    Rolf Latham, 7th Apr, 2020
    #14
  15. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @Andy Kelly - they are allowing
    • Eligible customers currently with an Interest Only (IO) loan that’s expiring in the next six months can ask for an additional 12 months IO extension
    • For genuine hardship relief please refer your customer to the Customer Support team
    There is a qualifying checklist your broker can help you with.
     
    Property Twins, 7th Apr, 2020
    #15
  16. Andy Kelly

    Andy Kelly Member

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    Thanks, Property Twins, my I/O period has already expired and I'm currently paying I&P. I may apply for a hardship request is to extend the term and lower payments equal to interest-only which would roughly provide the same effect cashflow wise and avoid capitalisation of interest? My tenants have lost their job and are seeking rental assistance.
     
    Andy Kelly, 7th Apr, 2020
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  17. Andy Kelly

    Andy Kelly Member

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    Update, called Choicelend for 6 month payment holiday, will continue to make the interest-only repayments so the interest won't capitalise and I can still claim the interest for negative gearing. My only concern is the increased principal payments at the end of the holiday, but I'm gambling that APRA will have flick the switch and allowed banks to do I/O without a full loan application
     
    Andy Kelly, 8th Apr, 2020
    #17
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