We have a P&I loan for a unit in sydney. This was originally our PPoR and has now changed to a neg geared rental. When we took out the loan a couple of years ago, we just took te loan with the cheapest interest rates and lowest fees. Now that we want to change it to Iinterest Only loan, Wizard tells me that our loan is an old product and we can't do it.
How does it effect them? I want to use the pricipal part of that loan to pay off my non deductable debt. They receive the same interest payments no matter what don't they?
Do I have any other options to have this loan changed to IO from P&I? Nasty letter? Refinance?I'm not a broker, but I assume like me you have ratebreaker. You would need to consider the cost of altering the loan (mine says within 4 years) and whether a refinance would result in higher interest.
crj wrote:I'm not a broker, but I assume like me you have ratebreaker. You would need to consider the cost of altering the loan (mine says within 4 years) and whether a refinance would result in higher interest.I was hoping someone would be aware of a way to do it without breaking prematurely. I can't see how it could benefit Wizard from stopping me doing this and was wondering what i might be able to do to get them to drop the principal from my repayment so i can put it to beer use. I'd be dropping a good couple of % if i broke from the loan.
Hi Jas
Unfortunately Yes they can set the Terms and Conditions.
Have a look in the original letter of offer and see if there is a charge for switching to IO. If not then I would guess it is not an option under that Wizard loan.
Could well be that for the package of RMBS they were not accepting IO loans.
Regretfully the non Bank lenders are really feeling the pinch and therefore refinancing could certainly prove a cheaper option in the long run.
Richard Taylor | Australia's leading private lender
A lot of these non-bank lenders get their funds from wholesale lenders. These come and go, and maybe yours has gone and they cannot change your loan.
Break costs and inflexibility are the unfortunate side costs of these sorts of loans.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
From memory Wizard only have ever sold about three 'ratebreaker' homeloans. …..and it looks like two of them are here. Seriously. Wizard franchise owners get virtually no commission from selling these loans, so just like most brokers, would not recommend a product that they don't get paid for. Seriously, this loan product was introduced just so Wizard could advertise having one of the cheapest homeloans. Knew a guy that worked for wizard actaully show a client how a higher interest rate (and of course more flexible) wizard loan would actually save them money, and the client still went for the 'ratebreaker'. Payments are only allowed to be paid monthly too – one of the reasons it costs more long term. Rate shopping even among the same lender is not always the way to go……however you should be able to convert your loan to another wizard loan (for a few hundred bucks and then make whatever changes you want. Even banks charge $300 or so to change a loan (often called a product switch) unless you pay an annual fee for a so-called 'professional' type package deal.
As I imagine you must have insisted on this loan, may I suget you switch it to a better one (as recommended) and get on with it.
all the best.I would suggest go for bank lender… non-bank lender like wizard, RAMS etc.. in the virtual of dying…
They cost more than bank lender. A lot of misleading information by non-bank lender that they can compete with bank lender… but at the end.. the proof is they are wrong..I still don't understand why people want to go to non-bank lender when bank lender offer more superior and cheaper loan.
Cheers
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