Changing to Interest Only

[jellybellybean]

Hi, Thank god I found you on here, what a great idea! I have a question.. We were living in WA and bought a house there last year but have since moved to Brisbane for my partners work. Our mortgage repayments are currently $700 per week and we are paying $380 a week in rent here. This has been manageable (just) until now but I am going on maternity leave in 8 weeks and then things will change.. We have the house in WA for sale but it has been listed for 3 months now and we havent had much interest so are looking to take it off the market until things pick up again. The house is currently renting for $280 per week but we need to rearrange things to make it all more manageable. We have spoken to the bank and if we change to interest only the repayments will be approx $550 per week but I dont fully understand the implications of what will happen when we do eventually sell.. Pls could you enlighten me?? Or offer some other suggestions.. It will be very very much appreciated! Thanks

[andie_pandie]

Hi there, I'm glad you found me as well.


Basically by changing the structure of the loan it will make it easier for you at the present time (and impending maternity leave) and I do not see any problems for you when it eventually does sell. The bank may charge a loan variation fee to make this change and sometimes they require a credit assessor to make a decision whether they are happy for you to go to interest only for a specified time.

I am assuming that you lived in the property prior to moving to Sunny Brisbane, hence you may have capital gain issues when you come to sell, you may have already talked to a accountant or ATO regarding this if not it is always a good idea to do this? This should only be on the timeline that it was rented for, and a calculation will have to be made at tax time after the sale of the home.

Maybe you could still look at keeping the house on the market just in case, or look at other agents some do not charge advertising and this might make it easier for you as well. The repayments are definately quite high and it may put quite a bit of pressure on you when you have the baby.

I was in almost exactly the same position this time last year. We bought land and started construction on our home (then got pregnant), our own home was on the market and we had subject to sale with a buyer and he could not sell, so after several months we had to get another buyer. Our mortgage was extremely high and as I had to give up work with my pregnancy at 24wks it was quite tough but we had back up money. I was so stressed that it would not sell however as soon as we relisted it we had a buyer straight away and the stress was all gone, until we had problems with the new house 75% finished when we moved in, flood 4 days later and the list goes on with a 3mth old baby...........

I hope this information is helpful to you if you need any further assistance feel free to PM me.

Kind Regards - Andrea