PPOR, looking to quickly switch loan to IO, current institution seem to require full application including $350 fee. IO term 5 years. 100% offset is possible. If I wanted to extend IO beyond that another full application would be required.
The bit I'm most concerned about is that they set the repayment amount, effectively lowering the principal of the loan. Lets say $320K in the loan, property valued at about $450K, $50K in the offset, interest calculated on $270 but repayments set as if is was $320K. So after 5 years I would have a lower principal but also less flexibility in cash flow on the way.
Questions:
1. Have I understood that correctly?
2. Is that 'normal'?
3. Am I right in thinking that i would be better off having the repayment amount move depending on the offset balance which will also ensure I have greater flexibility in what to do with cash flow?
The bit I'm most concerned about is that they set the repayment amount, effectively lowering the principal of the loan. Lets say $320K in the loan, property valued at about $450K, $50K in the offset, interest calculated on $270 but repayments set as if is was $320K. So after 5 years I would have a lower principal but also less flexibility in cash flow on the way.
Questions:
1. Have I understood that correctly?
2. Is that 'normal'?
3. Am I right in thinking that i would be better off having the repayment amount move depending on the offset balance which will also ensure I have greater flexibility in what to do with cash flow?