Discount on Prepaid Interest

Viewing 6 posts - 1 through 6 (of 6 total)

djones
Member
@djones
Join Date: 2003
Post Count: 20
June 3, 2003 - 1:14 am
Hi All:
Just wanted to enquire if banks offer any discounts if we offer to prepay interest for the following year. The loan in question would be interest only(if that matters).
Thanks
-D-
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
June 3, 2003 - 2:32 am
DJ
yep. most banks offer a discount of around 0.1% to 0.2%. The ATO requires that there be a commercial advantage in pre paying interest – otherwise you would be doing it just for tax advantages.
Terryw
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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dr house
Participant
@dr-house
Join Date: 2001
Post Count: 281
June 3, 2003 - 11:54 am
I am in the process of prepaying my interest, the bank has to redo the loan papers.
I am only doing the one property we hold in our names, since those held in trust arent earning a positive income.
My approach is cashflow neutral/capital gain, more like Stuart’s approach but not in any way as gun-ho.
djones
Member
@djones
Join Date: 2003
Post Count: 20
June 3, 2003 - 1:04 pm
Is the prepaid interest only available on fixed rate. CBA is not giving me this option on the variable rate loan. do you know of any banks offering this on Variable rate loan.
-D-
whj
Member
@whj
Join Date: 2003
Post Count: 13
June 3, 2003 - 1:43 pm
Hi DJ
Most banks will offer a discount, however it does come down to your negotiation skills.
Don’t take an internet site or what you are told by a telephone banker as finality, that information is just the banks standard policy.
If you have a personal banker, talk to them – they understand there is less “risk” for them having 12 months of interest in advance and the use of the money for that period.
Besides ask and keep asking, they will eventually say yes, and if not (if possible) change to someone who will.
WHJ
Nessie
Member
@nessie
Join Date: 2001
Post Count: 73
June 3, 2003 - 9:32 pm
Hi all,
djones – did to you ask the CBA to prepay interest or did you tell you need to prepay your interest ? There is a big difference.
If it was the first option go back to them with the second. If they won’t do it then tell then you will re-finance because “your accountant says you must prepay interest”. Get my drift !!
I think you will then find the Bank will accommodate you.
Cheers
Nessie