Hi,
I would like some advice. I have 2 investment properties and rent in the Sydney CBD. I am currently on an IO loan and have a 100% offset. I received a letter from my bank to say that from 1 November my IO interest rate would be going up by 0.40% but if I wanted to swap over to an P&I loan, it would stay at the same rate I am currently on (which is comparible to most other P&I investment loans).
I am a single income so I am not looking to buy a PPOR. I love living in the CBD, can’t afford to buy here and happy with 2 investment properties. I won’t be buying another investment property either (I know people say, you should never say never, but with a single income, I am not looking to buy a 3rd one).
Should I just convert to a P&I loan and start paying off the principal as well. I know its better to be putting all my money in the offset (which I am disciplined in doing) but is it worth paying 0.40% increase and still build up my offset or if I am not going to buy another IO property, changing to P&I payments is fine.
I do have funds available to me already in my offset e.g. 200K and I can afford P&I payments as I have been keeping the principle part in my offset.
Sorry if this a dumb question.
Regards
Debbie.
I’d talk to a investment focused broker to maybe map out the different options available. Might be worthwhile to switch banks and get a better rate for the principal and interest loan anyway.
I would never rule out investing again. Things change and Sydney might not be unaffordable for ever *fingers crossed*
Happy to pass on broker details we use for clients if you would like?
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Hi,
Thanks for your response.
I have been working with my broker and I mentioned, my P&I rate is the 2nd lowest in the market (only 0.04% difference) so I am not really interested in changing for that amount.
I definitely won’t be buying in the future, 2 properties is enough for me.
The question I was more asking about was would there be any advantage of paying 0.40% higher on the IO rate and put the rest in my offset, or should I just change over to P&I.
Thanks.
Debbie, firstly great work getting your first two.
look, PnI over IO is just forced saving, if your doing it anyway and save (x) amount extra in the .4% per year (which you wrote differently a few times) then why wouldn’t you swap, providing there is no tax reason.
what is your rate now?
what did the bank state it will change to?I would be happy to have a chat and answer all the questions surrounding and give you a in-depth answer rather than the vagueness I can with the information so far. (feel free to message me to organise a chat time – 0431376130)
Kind regards
Jaxon Avery
0431376130Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Jaxon,
Thanks for the response.
I am currently with Suncorp and my current rate for an Investment IO loan is 4.36% (with 100% offset) and they said they would keep me on the same rate if I was going to change to their Investment P&I loan, otherwise it is going to revert to 4.74% from 1 November.
Sorry for confusing you, I make sure I keep in the bank what I would be paying if it was P&I (have a spreadsheet) so I know how much in my offset is my mortgage and what is money I have saved on top of this – if that makes sense. So me changing to P&I will not affect my living etc.
Unless I can get a far better investment P&I loan rate with other banks (which my broker said not really), then it probably makes sense to stay with Suncorp and change it over to P&I.
Thanks
Debbie.
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This reply was modified 7 years ago by
Debbie.
Hi Debbie,
In case you weren’t aware, propertyinvesting.com itself works with a finance group to get really good deals. I don’t know what they are right now, as the recent APRA changes may have changed things. Suffice to say that Steve mentions he can source a great rate based on the size of the membership of pi.com.Go here to check it out:-
http://www.PropertyInvestingFinance.comA few months ago they were showing rates in the 3’s. Give them a call to see what can be done today,
Regards,
BennyYou can still get sub 4% on P & I investment loan at 80% lvr.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
agree with the boys, you can likely beat 4%
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
Hiya
If you have no intention of purchasing an owner occ in the future – and if cashflow enables it then I’d consider going down the P&I path.
With the rate difference between P&I and IO widening these days – you’ll probably find that the monthly repayments aren’t going to be drastically different (depending on how long your previous IO term ran for).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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This reply was modified 7 years ago by
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