Refixing your Mortgage
Email This Post
When a letter arrives from your bank about refixing your mortgage – make sure you understand the fine print. MoneyTV’s Lisa Dudson speaks about the importance of reading the fine print.
Email This Post
September 10th, 2007 at 12:08 pm
Another thing which came up after refixing my mortgage was the length of time the interest only period had originally been set for. This was something I was wholly unaware of. The bank sets a period, quite seperate from the loan, which sets how long they will allow you to have “interest only” on your loan. After this period the loan will default to Principal & Interest, unless you renegotiate the interest only period. As it happens the interest only period for several loans had been set to coincide with the period of the loan itself. The interest only period is apparantly usually set for 5 years. I guess I didn’t read the small print carefully enough. I am now renegotiating with the bank.
Is there a standard period & can this be negotiated seperately from any loans e.g. for your LAQC as a whole?
Thanks
September 11th, 2007 at 10:22 am
It varies from bank to bank, however currently as an example ANZ will do interest only for the period that you fix for, ie 2 years. Westpac and ASB typically do 5 years. The max that I have seen is 10 years. Usually you can negotiate at the end of the period to do another interest only period. However you need to be mindful that the banks are starting to tighten up on some of their lending criteria so it may get harder to re-negotiate. It will depend on the strength of your overal financial position