Interest Only

[magic]

What happens at the end of the IO period? Say it was 5 years IO. To get another IO period would require another loan application right? So if I have lower employement income at that 5 year mark or become unemployed at that time, would it just revert to P&I without the need for a loan application? If not, I think it?s safer to go P&I from the beginning.

Do you find out whether a new application is required at the beginning, i.e. is it shown on the loan docs what the process is or do you find out at the end of the IO period?

In the beginning, which period is usually most commonly on offer or which period is not difficult to get approval for, would it be 5, 10 or 15 years?

What would happen if the loan is not approved at the end of the IO period, forced to sell?

Can the loan be converted to P&I during the IO period without loan approval?

If you start with IO for more leverage then convert to P&I during the IO period, would that be ok/permitted?

When the IO is converted to P&I, how would I know if the P&I will come with an offset account or not.

Thanks

 

[D.T.]

At the end of an IO period it reverts to P&I, this doesn't require an application. But you can negotiate another period or go to another bank who'll grant one.

 

[Peter_Tersteeg]

Some lenders only require a small variation form to renew the interest only period, others will require a full application. Depends on the lender.

If the LVR is above 80%, most lenders will require a full application.