P&I to IO Conversion Complication

[citystar]

I have recently applied at ANZ to convert my home loan from P&I to IO in preparation for renting it out however I have been advised that I will be unable to keep the interest rate discount of 0.70% which I currently have if the loan changes to IO. It was explained that the current loan will be paid off, with a new loan established as IO. As the criteria for the 0.70% discount has tightened substantially over the last couple of months they will be unable to pass on the 0.70% if I choose to go this path. They have offered me 0.50% discount which basically means my interest rate would increase by 0.20% to change to IO. I’m looking for advice on how to persuade ANZ to reconsider or override this rule because sometimes I’m not the best with choosing the right words to use. What options or ideas would you recommend? I'm trying to setup the loan as IO so that I can increase my cash flow and leave it in the 100% offset account reducing the Principal as I save up for the next deposit.

 

[Rolf Latham]

Hiya City

ANZ has always been hard to work with when doing any loan changes, now with their current credit tightening even more so.

IO variable to IO fixed for example needs a new loan app, as does PI to IO.

The best thing you could consider ( depending on the lvr) is to move to a more reasonable funder such as CBA or WBC, both of which will do 70 pts at 250 k with IO 100 % offset.

Your current ANZ effective rate is 6.41
If you could convince them to go .7 6.21
CBA Pro pack 6.04
WBC Pro pack 6.21

We have found ANZ to be very very inflexible of late in terms of rate and credit policy , I can only suspect that their mortgage insurer and cost of funds are contributing to this.

Having said all that, often, rate should not be your main focus.

ta
Rolf

 

[citystar]

Hi Rolf,

Your right about the interest rate not being the main focus. What I am looking for would be the flexibility to customise the loan to work with my current and future investment goals. I am going to take your advice seriously and organise a few appointments with several other banks to find out if they are more understanding and willing to do business with me.

Thanks.


Daniel

 

[marg4000]

Nothing has changed.

When we first took the ANZ breakfree package about 4-5 years ago we were told then that the .7% discount did not apply to IO loans. At that time we were told there was no discount for IO loans, so the fact you are being offered .5% means benefits are actually better now.
Marg

 

[Spectre]

Daniel
You're on the gold coast and so's rolf
Why not let him do the legwork for you
(Hes actually not a half bad guy if you can get past the drooling)