Please help--about repayment

[violots]

Hi,thanks for your opinion first.

I set up a home loan with Commonwealth Bank last month,after settlement on 1/7/08,I had about 10,000 extra money,so I used this amount money to repay my loan, I thought that my repayment of 10k would bring down the fortnightly payment,but the staff in bank told me that I will pay the same amount fortnightly,she said maybe 20K repayment would make a difference about the fortnight payment, is this true? Maybe I should go to the bank again to ask another staff.

Is it true of what she told me?

Thanks

 

[battle on]

No it would probably not reduce the fortnightly payments too much depending on how much you borrowed but it will reduce the length of the loan. There are various online calculators you can use to work this out.

Cheers

 

[The Y-man]

Hi,thanks for your opinion first.

I set up a home loan with Commonwealth Bank last month,after settlement on 1/7/08,I had about 10,000 extra money,so I used this amount money to repay my loan, I thought that my repayment of 10k would bring down the fortnightly payment,but the staff in bank told me that I will pay the same amount fortnightly,she said maybe 20K repayment would make a difference about the fortnight payment, is this true? Maybe I should go to the bank again to ask another staff.

Is it true of what she told me?

Thanks

Assuming this is a P&I loan, your repayments will not change. The only thing which will change is the portion of your repayments going towards your principal. i.e. the number of repayments you make over the life of the loan (10 years, 20 years etc) will change.


Cheers,

The Y-man

 

[Rolf Latham]

Hiya Violots

If it is a principal and interest loan, you may be able to have the repayments recalculated..........the other question is, is the loan variable or fixed rate please >

A flexible structure for what u want to do in most ( but not all )) cases is to have an interest only loan with a 100 % IO offset acct.

ta
rolf

 

[Bradsdad]

Hi,thanks for your opinion first.

I set up a home loan with Commonwealth Bank last month,after settlement on 1/7/08,I had about 10,000 extra money,so I used this amount money to repay my loan, I thought that my repayment of 10k would bring down the fortnightly payment,but the staff in bank told me that I will pay the same amount fortnightly,she said maybe 20K repayment would make a difference about the fortnight payment, is this true? Maybe I should go to the bank again to ask another staff.

Is it true of what she told me?

Thanks

If the loa is a variable rate loan the $10k may be available for redraw depending on the loan type. If it is you should be able to contact the cBA and have them cancel this amount for redraw and have them THEN recalculate the repayments. If you require the funds to be available for redraw then the repayments won't change.

I have to laugh at the staff member you said that maybe if you paid an extra $20k off that it may make a difference. Just got to love guess work and trying to compound a problem.

 

[Buzz]

As Rolf suggested you can have the repayments reduced on a P&I loan if you have the lender ackowledge that the limit has been reduced by the $10,000 and they formally reduce thelimit and then the repayment is recalculated and reduced.

The only flaw with this is that you cannot get that $10,000 out as a redraw as it has been absorbed in reducing the loan.

Jane

 

[violots]

Hiya Violots

If it is a principal and interest loan, you may be able to have the repayments recalculated..........the other question is, is the loan variable or fixed rate please >

A flexible structure for what u want to do in most ( but not all )) cases is to have an interest only loan with a 100 % IO offset acct.

ta
rolf

Thanks for reply first.

What is a principal and interest loan?
yeah, my loan is variable loan.I borrowed about 300K from the CBA,interest rate 8:74%.

 

[Rolf Latham]

Hiya Violots

A PI loan is a loan that you pay back the intial loan amount ( the principal) and the interest over time, say 25 or 30 years

Most people looking to invest have Interest Only loans, where say for 5 years you dont pay any principal back.

There are various reasons why for many this is a better strategy

ta
rolf

 

[violots]

If the loa is a variable rate loan the $10k may be available for redraw depending on the loan type. If it is you should be able to contact the cBA and have them cancel this amount for redraw and have them THEN recalculate the repayments. If you require the funds to be available for redraw then the repayments won't change.

I have to laugh at the staff member you said that maybe if you paid an extra $20k off that it may make a difference. Just got to love guess work and trying to compound a problem.

Thanks for explanation.

Does this mean if I have extra money to pay in the future then I have to ask them to cancel for redraw,so I can have the fortnight payment reduced?

 

[Rolf Latham]

It would look that way,...............its generally the only way u can get the repayment recald

ta
rolf

 

[Bradsdad]

Thanks for explanation.

Does this mean if I have extra money to pay in the future then I have to ask them to cancel for redraw,so I can have the fortnight payment reduced?

Yes if you want the repayments reduced. Just remember that you would need to re-apply (new application) for the funds should you ever need them again.