I was trying to find out about prepaying my interest on my investment property because I am going to have a big tax bill this financial year. I contacted my lender who said check with accountant. I have a fixed interest rate of 6.85% for the next two years and pay interest only. I am confused by what the difference is between me paying the interest early would be with tax department regarding interest and principal. The lender was relunctant to give any advise. I am waiting on accountant to reply but time is ticking. Can anyone help.
You probably are too late. The forms have to be in weeks prior to the end of the financial year. New documentation needs to be prepared and signed.
With our loans, organising a prepayment means fixing the rate for a number of years as well.
If you have a big tax bill, why not prepay your rates and land tax and insurance, and anything else you can.
As wylie mentioned you are about 6 weeks too late.
In most cases you cannot prepay a 2 year fixed rate anyway however i would be getting your mortgage broker to be planning ahead for you next year in plenty of time.
Richard Taylor | Australia's leading private lender
Thanks for information, big tax bill this year and low income for next financial thought I might have been onto a winner. I will see if I can prepay my insurance and rates. Still have big shortfall anyway.
You'll probably find your lender has a specific pre paid loan product… if this is the case i would be surprised if the lender would let you change to a pre paid loan on your current fixed interest rate. you would need to do the sums to see if it would be worth losing the current rate just to pre pay on this particular investment. i wouldnt think it would be a great move considering the difference at the moment
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