5yr IO up what to do

[darcy13]

Hi

I have 2 IP's who's IO period is about to expire.

The 2 options I think I have is to get the IO period extended with current lender or 2 new loans with new lenders .

What have been other inversters found to be the best course of action ?

Both IP's were LVR 80% at the time , there has been no extra money put on either loan , both loans are up to date ?

stuart

 

[Peter_Tersteeg]

You're already aware of the two options - refinance or restructure.

On balance of probability, the discounts being offered by lenders are almost certainly more generous than what they gave 5 years ago, so refinancing would likely get you a better deal, or you might find it triggers your existing lender to offer you a better deal than what you've got, so this is a reasonable option.

On the other hand, you circumstances at the moment may make it difficult to refinance, so refinancing may not even be an option which leaves you with restructuring with your current lender. This is probably a quicker and easier option as well (although that can vary from lender to lender).

 

[Aaron_C]

Which lender? If it is a decent one all that's needed is a revaluation of the security and they should be able to give you an extension of the IO period. If not, then you may have to change lenders to a better deal.

 

[Rolf Latham]

Hi

I have 2 IP's who's IO period is about to expire.

The 2 options I think I have is to get the IO period extended with current lender or 2 new loans with new lenders .

What have been other inversters found to be the best course of action ?

Both IP's were LVR 80% at the time , there has been no extra money put on either loan , both loans are up to date ?

stuart

depends ...........who is the current lender ? with some its an easy tick and flick, with some its like root canal,

As Aaron and PT have indicated there is a good chance a new lender may do better rates etc, BUT you might be surprised how all of a sudden your incumbent lender can suddenly cut rates if approached the right way,

having said all that, given your sig statement, id be inclined to gear them back up to80 % at least and go again , if that suits your risk profile etc

ta
rolf
ta
rolf

 

[beachside]

I have fought the ANZ on this for 18 months (to change back to IO) as they keep changing the goal posts ...each time I am lined up for a goal the posts develop feet again! I had one bank manager batting for me (excuse switching sports), signed the paperwork and he was confident he could get the switch through. I did not hear back from him and when I rang a few weeks later he admitted he had been too embarrassed to call me as the guidelines had changed again and I needed full docs to switch back to IO - to prove I could afford to pay $1000 a month less I have written to the manager of ANZ lending to explain how ludicrous their guidelines are ...got a phone call to say my thoughts would be taken into account when next reviewing guidelines. They could not be even bothered replying by mail.

But here's a beauty I got in the mail today from CBA - increasing rate by .25% effective 14 December Aren't rates falling at the moment Silly me, its their early Xmas present to themselves

 

[Aaron_C]

ANZ is **** for IO because extending the IO period, changing from PI to IO (vice versa) is a 'credit critical' decision and must be looked at by an assessor. What a waste of time both for the client and the assessor.

 

[Rolf Latham]

But here's a beauty I got in the mail today from CBA - increasing rate by .25% effective 14 December Aren't rates falling at the moment Silly me, its their early Xmas present to themselves

I guess you are on a lo doc product ?
t
arolf

 

[beachside]

Oh, and my LVR on ANZ loan is down to about about 55% from 80%. Talk about stick their fingers and their ears and start humming, they may as well have given me the finger!

I guess you are on a lo doc product ?
t
arolf

Hmmm, they sort of answers what I was wondering ....low docs only?

 

[Rolf Latham]

ANZ is **** for IO because extending the IO period, changing from PI to IO (vice versa) is a 'credit critical' decision and must be looked at by an assessor. What a waste of time both for the client and the assessor.

its got a little bit better

there is a new process which works some of the time which is an in branch switch.

half the time the branch person knows what to do, and the other half of the time they put the client through the full "financial planning"

ta
rolf

 

[Peter_Tersteeg]

Oh, and my LVR on ANZ loan is down to about about 55% from 80%. Talk about stick their fingers and their ears and start humming, they may as well have given me the finger!



Hmmm, they sort of answers what I was wondering ....low docs only?

LVR makes no difference to the ANZ. It's credit critical so it requires a full application. I certainly understand your frustration.

The CBA sent out an email yesterday to all brokers with regards to their lo doc loans increasing by 0.25%. Fortuantely it doesn't apply to anything else. I suspect the CBA will see a lot of lo doc loans being refinanced to other lenders over the next few months.

 

[Rolf Latham]

I suspect the CBA will see a lot of lo doc loans being refinanced to other lenders over the next few months.

Im expecting that this is part of the strategy : )

ta

rolf

 

[Player]

ANZ is **** for IO because extending the IO period, changing from PI to IO (vice versa) is a 'credit critical' decision and must be looked at by an assessor. What a waste of time both for the client and the assessor.

Yes, I went thru this earlier this year. "This will be a hassle.......this is a credit critical application....." were their words by email. Fantastic, see ya later.

Gave me the push I needed to extract another title from the b(w)ank and lender of the year. In hindsight it was better that I didn't just roll the loan over into another fixed term. Got better rates and higher LVR (multi units on one title) with Suncorp. Also managed to leave a small portion variable with offset for future re-val and equity extraction. ANZ weren't willing to do that.

 

[Aaron_C]

The CBA sent out an email yesterday to all brokers with regards to their lo doc loans increasing by 0.25%. Fortuantely it doesn't apply to anything else. I suspect the CBA will see a lot of lo doc loans being refinanced to other lenders over the next few months.

At a info session earlier this year the CBA said their appetite for lo-doc was non-existent. I guess this is the manifestation of that...although now even pseudo-lodoc (what I call it, true lo-doc is dead) has cashout limits even with the good ones like ABL etc which makes it just worthless.

 

[Bradsdad]

LVR makes no difference to the ANZ. It's credit critical so it requires a full application. I certainly understand your frustration.

The CBA sent out an email yesterday to all brokers with regards to their lo doc loans increasing by 0.25%. Fortuantely it doesn't apply to anything else. I suspect the CBA will see a lot of lo doc loans being refinanced to other lenders over the next few months.

There was a change back in July. I have a good relationship with a few managers and get them to sort it with completed forms. No hassles so far.

 

[Elstupido]

Sorry to hijack this thread,

I have a fixed rate loan that will mature tomorrow. I intend to split the loan into fix and variable. The bank asked me to fill in the loan switching form and it will need to be assessed.

Newbie questions:
1. Is this a common practice in splitting the loan into a simple PI fix and PI var? I thought I would just need to ring the call centre and they will do it for me.
2. I am going to split 20 fix:80 var. Currently I am getting 0.9% off SVR (wealth pack). Will this splitting effect the discount Im getting now (would the bank reduce it)? Since they said they will need to "assessed".

Thanks in advance.

 

[Aaron_C]

Being assessed doesn't affect the discount it just means that the credit assessor will have to review your income and see whether you qualify or not.

 

[beachside]

At a info session earlier this year the CBA said their appetite for lo-doc was non-existent. I guess this is the manifestation of that...although now even pseudo-lodoc (what I call it, true lo-doc is dead) has cashout limits even with the good ones like ABL etc which makes it just worthless.

I would need to look up my contract with CBA to see if they distinguish between std variable rate for full doc and lo doc. I'm paying a pro package fee for a .5% discount ....which is normally discounted from the std variable rate. So if they are just increasing the lo doc interest rate and not the std variable this would be reducing my discount entitled under pro package??

Brokers?

 

[Peter_Tersteeg]

I would need to look up my contract with CBA to see if they distinguish between std variable rate for full doc and lo doc. I'm paying a pro package fee for a .5% discount ....which is normally discounted from the std variable rate. So if they are just increasing the lo doc interest rate and not the std variable this would be reducing my discount entitled under pro package??

Brokers?

I don't have any CBA documents in front of me to check, but you may find that they can change the reference rate or the discount applied at will.

They generally wouldn't do this unless they want to create an exodus of borrowers. In the case of lo doc, this is probably exactly what they want.

 

[Spectre]

I believe that the CBA rate change only applies to variables so may be easier to (dare I say) fix the thing and it'll give you time to get financials up to scratch to roll it back to a normal variable in a year or two or three.
That aside if you stack up then refinance or jump through the hoops to get it back to a normal rate.