interest only for PPOR

I'm pretty sure we can get IO loans for PPOR because I've read many thread regarding this in SS forum. But my friend who happens to be a broker (haven't signed up any loan with him) told me it's impossible. He adamantly claim that we can only proceed with P&I for PPOR because he needs to explain reasons to the lender and it cannot be if the purpose of this is purely for serviceability. I'm like whaaaaaa......:confused:

Thanks heaps
 
ha ha...tell the lender you may convert the property to an IP in about 5 years time and want to preserve maximum tax deductibility in the future while directing extra principal to your offset account in the interim. This should be enough.

The lenders are cracking down on this due to APRA RBA concerns but it's is lender specific at this stage with Nab and Suncorp coming to mind as the strictest.
 
IO with offset against a PPOR is still possible - I write a fair bit of these.

The broker will need to explain why (Marty's example is pretty much what I provide) - and obviously there needs to be a clear benefit to the client in setting up the loan this way.

Cheers

Jamie
 
The offset account doesn't make much difference, it's just a useful way of effectively paying down the loan to reduce interest, but keeping the money separate which can be handy for tax purposes.

I/O loans for PPOR purposes are done all the time, it's not a big deal. Worst case a brief explanation of why might be required, but that's very, very easy to address as Marty has outlined.

I don't think they'd accept the reasoning of reduce repayments make it more affordable. This would be a big red flag.
 
I have IO with offset on PPOR, this was important for me because its going to become an IP soon and wanted maximum tax effectiveness.
 
He adamantly claim that we can only proceed with P&I for PPOR because he needs to explain reasons to the lender and it cannot be if the purpose of this is purely for serviceability.

Maybe time for an IP savy broker.

My ppor's have been IO since 1997 and still is today.
 
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