Ending fixed rate early

[grantlyt]

I am considering selling an investment property and buying a new one. The thing is that there is still 3 years to go on the fixed rate of the loan. Would the bank, CBA, entertain the idea that they waive the early exit fees if I took out another loan for the same amount for a different property? I understand that I would take out the new loan first before exiting the older loan. It would be like transferring the loan from one property to another.
What if the new property loan was of less value compared to the older one? Would they work out some arrangement here?

 

[Rolf Latham]

assuming the new place is the same price as the old, and same day or near same day settlement is possible u can look to port the securities.

Bit hassly, but doable.

If the break cost isnt huge, AND you qualify for nee credit, a new lon is often better.

Break cost is generally deductible in the year you incurr it, so look at all the numbers

ta
rolf

 

[Brady]

If you could post some figures of...

- Current loan balance
- Current property value / sale
- Value of purchase property
- Are you putting any funds into the purchase

It will assist.

I would suggest asking for a payout figure to get idea of the cost involved. CBA is reasonable easy to complete a security substitution.

Same day - property > property - $300 security sub fee

Different days - property > term deposit > property - $300 fee x 2

 

[Rolf Latham]

Different days - property > term deposit > property - $300 fee x 2

yes, xtended port a lilttle more exxy, but at least with a deposit taking lender its possible.

With some securitised lenders, its not and can hurt !

ta
rolf

 

[Peter_Tersteeg]

Highly unlikely you'd get exit fees waived.

Security substitution is great if you can buy another similar property at the same time, but realistically this almost never happens.

Do you have other property? You could move the fixed loan to those properties.

The term deposit solution also works but you'll loose money on it simply because the deposit rates are likely lower than your fixed rate.

 

[Brady]

Also noted that you're talking about and IP and not a PPOR.

I would get some professional advice to ensure that if you were to transfer the securities that the original loan would remain deductable.

 

[Marty McDonald]

Good point Brady. Purpose of funds was to buy an IP no longer held? there would be no new loan originated BUT the purpose of the funds is still investment related.

Accountants advice needed but I think you might get two different answers depending on the accountant..

 

[grantlyt]

Actually after some more thought about it I would prefer to sell my PPOR to downsize and free up some equity to pay for my kids schooling. I still have 2 investment properties but they are also on fixed rates for another 3 years.
My preferred option is to sell my PPOR now valued at 800K (owing 460k) and purchase something for around 500K. This would improve cashflow, move into a more suitable house and enable me to put the kids into private schooling. My concern is the early exit fee for the fixed loan.