Anyone know the policy for extending I/O on the following?
Do they need new applications or assessments of serviceability?
All require full applications. The only lenders (off the top of my head) that may not require full applications are Westpac & CBA. Quite often they also require a full application.
So it looks like the best safeguard is really an option for 10-15 years. Which banks offer this? And what are the catches?
Westpac, CBA & ANZ spring to mind.
The catch is they assess your application based on the remaining P&I term after the I/O ends. If you want a 15 year I/O term, your affordability needs to be demonstrated on 15 year P&I repayments. This is a pretty tough call for many people.
Thanks, at least these 3 have the best servicability for me. 4 years to go anyway, and hopefully 4 more pay rises
Not so sure about AMP and serviceability any more danwatto - i just got an email that seems to indicate (haven't confirmed yet by calling my contact) that they won't take mortgage debt held with other institutions at actual repayments anymore. In fact, they'll take it at assessment rate & P&I - which is very conservative.
Quickly turns them from a great serviceability lender to one of the more conservative ones - will be very nasty for any investor with a portfolio looking to do a cash out.
Specific words from the broker email below:
Factoring external debts
Loan repayments for external debts (mortgages, personal loans, overdrafts, margin loans, and line of credit) are to be assessed using the higher of:
- Repayments calculated by using AMP Bank?s loan assessment rate against the total limit of the external debt (on Principal and Interest terms)
- The sum of the borrower(s) declared monthly repayment amounts
In line with this topic - an I/O extension with THIS change to servicing? Given one of AMPs few strong points is servicing, investors using them with other properties are likely to need to have to refinance to extend terms.
No doubt that APRA's behind the change.
No credit scoring and a fairly reliable DUA.
But servicing of OFI debt thats similar to ANZ/Suncorp/St George, and normal treatment of rental income.