Why do banks calculate your loan P&I even if you are going to get an IO loan?
The Big Red Dragon that is St George is one that does this however I find it funny that they have a 99 year IO loan available on some products.
Lenders assess serviceability using a P & I repayment on an affordability rate as a buffer to allow for when the loan rolls over to P & I at the expiry of the interest only period.
The Dragon has a maximum interest only term of 15 years on its Term products.
Richard Taylor | Australia's leading private lender
I went to the NAB for a meeting and have to say have come away bitterly disappointed as they have used an interest rate of 8.25% IO for there calculations. I understand you have to play their game but come on how is anyone suppose to get ahead?
Sorry thats meant to be P&I.
To be honest 8.25% is one of the more favourable affordability rates.
Hard to comment on how you get ahead without all of the facts and figures to hand.
Remember ever lender has a varying way of looking at serviceability.
If it doesnt fit with 1 lender then you might find another has a more flexible calculation model.
Richard Taylor | Australia's leading private lender
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