Interest only to Interest and Principal

[chook77]

Hi
I have a question regarding an IP loan. We have just come out of a 5 year fixed, interest only period and the bank has said our loan agreement is that now we pay a variable rate and interest and principal.

We were just wondering if this was the best option or should we change loans.

Thanks in advance!

 

[Aaron_C]

Well yes the usual arrangement once you come out of a fixed loan is for it to revert back to P&I, variable rate. If you want to keep it interest-only then you can ask that bank for an extension of the IO period, or if they refuse, then you will have to change lenders. What is the bank and what is the new variable rate they are putting you on?

 

[chook77]

Thanks for your response Aaron. The bank is St George and we are now on a 7.19% interest rate.

 

[Aaron_C]

Wow....7.19% is above their Standard Variable Rate! Not surprising though since usually they revert you back to their SVR upon expiration of the fixed term anyway. Best if you ask them for a discount or just change lenders if possible.

 

[chook77]

Thanks heaps for your help, I will get on the phone now to them!

 

[jonmardell]

you should be able to get an extension to the interest only term and definately call them and ask for a discount!! or speak to a broker to ask for what other deals are out there if st george does not want to play

 

[Rolf Latham]

Thanks heaps for your help, I will get on the phone now to them!

IO extensions are possible with the Dragon.............. some banks make you do a full new app with vals and all

t
arolf