Switching from PI to IO is actually a full application? (Westpac)

Discussion in 'Loans & Mortgage Brokers' started by flosed, 9th Dec, 2020.

Join Australia's most dynamic and respected property investment community
  1. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    Hey,

    Just called Westpac to switch from investment PI(3.19 variable) to IO(fixed 2y 2.59). I was emailed a form to provide tons of information like a full application.

    But they said I need call back with all information ready . They can make a decision over the phone.
    Just wonder whether it is a full application with credit check or just spread sheet formula verification?

    Anyone has any idea?

    Ta.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    It's a full assessment.

    By going to IO, you're shortening the P&I period from 30 years to 30-IOperiod. Hence the repayments after the IO period will be higher and lenders need to verify that you can actually afford this.
     
    Niche and Terry_w like this.
  3. spoon

    spoon Well-Known Member

    Joined:
    17th Nov, 2016
    Posts:
    1,762
    Location:
    Time-dependent
    Does it mean normally more difficult to obtain approval with the same financial circumstances? Or they need to assure the employment is of longer term?
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    In essence you're creating a new loan. Any time you create a new loan, you have to apply and qualify for it using your financial circumstances at the time of application.
     
    Beano and spoon like this.
  5. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Full Assessment with credit check

    They need to confirm expenses haven't increased, income hasn't decreased, liabilities haven't increased etc since the original application was completed. Especially with all the changes to lender serviceability calculations over the past few years.
     
    spoon likes this.
  6. spoon

    spoon Well-Known Member

    Joined:
    17th Nov, 2016
    Posts:
    1,762
    Location:
    Time-dependent
    Thanks. Looks like a more difficult approval given Covid would have impacted on most people. Unless one is doing better under Covid... possible but few would.
     
  7. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    You would be surprised how many are either doing better or no worse off, maybe that's just QLD, lots of people buying property/refinancing at the moment.
     
    spoon likes this.
  8. Momentum

    Momentum Well-Known Member

    Joined:
    19th Aug, 2015
    Posts:
    1,123
    Location:
    Collins St, Melbourne
    Is it also a full assessment if you go from IO to PI
     
  9. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Nope, can switch to P&I anytime without any assessment
     
    Momentum likes this.
  10. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    I wonder how could they make a decision over the phone.

    I have many loan accounts(due to split) over 4 lenders. I guess one or two days work for average Assie bank speed.(no offence).
     
  11. Yson

    Yson Well-Known Member

    Joined:
    4th Jan, 2016
    Posts:
    361
    Location:
    Sydney
    Also I just found out that if I am switching from io to pi, the tenor of the pi loan is thur remaining loan tenor n now start from 30 yr, eg if I have a 30 yr io, after 8 yrs, if I am switching back to pi, the pi is based on 22 yrs n not 30 as what I thought
     
  12. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    Just a follow up.

    Westpac has changed policy. You can switch to IO for 12 months end of covid 19 package without serviceability check.

    In case you want to grab it.

    Wonder any other banks do the same ?
     
  13. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Yeah there are a few other banks offering same.
     
  14. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    They are beginning to wind back on this - NAB have noted that they are pulling the 1 year IO extension requests soon. Others will likely begin removing it over time too.
     
  15. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    True. Due end of March as Morrison asked to end covid financial support by then.
     
  16. Loverenting

    Loverenting Well-Known Member

    Joined:
    16th Nov, 2016
    Posts:
    159
    Location:
    Sydney
    Is it also now a full assessment if you want to change an IP loan to OOC? We used to just give the bank (Westpac) a call to switch (when we actually moved to live in one of our IPs).
     
  17. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    If you don't change long term, not a full assessment.
     
    Loverenting likes this.
  18. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    No
     
    Loverenting likes this.
  19. Harveys

    Harveys Well-Known Member

    Joined:
    1st May, 2017
    Posts:
    596
    Location:
    Gold coast
    Is requesting to extend IO another 5 years at the end of the first 5 year term a full app or resubmission of documents?
     
  20. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Full app, new updated supporting docs required, serviceability assessment etc.
    Good time to look around to see what other lender options are available since you'll be doing a full app anyway.