APRA changes, investment loan to P & I?

Lboosta on 23/03/2018 - 13:14

Hi all

Will like some opinions please, I fixed my investment loan at 4.58% ending in 2019 before the APRA changes.

From all the readings that I did, it was always to pay down PPOR (non-deductible) first but after speaking to a few friends, they suggested that I switch to P &I for my investment loan.

This is my situation and both loans with different banks:
PPOR – 3.79% owing $380k variable – principle and interest, paying extra)
Investment (our previous home) – 4.58% owing $450k, fixed interest only till 2019

Should I attempt to break cost with my investment to get a slightly better rate 4.14 (variable – P & I- investment loan) or ride it out till 2019?

Can handle changes to payments once Investment loan revert to P & I but prefers to pay down PPOR .

Thanks heaps!

Financial

Comments

  • tomleonhart on 23/03/2018 - 14:14

    cant answer your question but here's some quick math.

    4.58% - 4.14% * 450k = $1980. That's what you would pay if you leave your current loan set up.

    Probably not worth the hassle if your break cost is >$1980.

    • enzioFirenze on 23/03/2018 - 14:43

      I don't think that'll be the case as this loan is currently interest only, if you break it and make it P&I, you'd be paying the principal in addition to that $1980

  • CyberMurning on 23/03/2018 - 14:27

    very rare i heard happy ending story with full fixing home loan. my advise to friends are always variable or half fixed half not if they are really into fixing.

  • ABC730 on 05/06/2018 - 12:24

    Hi boosta,

    Sorry if this is out of the blue. I'm contacting you from ABC's 7.30 program and I'd really like to have a chat with you about this over the phone. Please let me know if this is alright with you, we're just seeking some background on a story we're doing on interest only loans and will not be quoting you. If you're alright with that, please email me on [email protected]

    Cheers

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