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  1. #1
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    Default Interest only loan

    Hi all,

    My husband and I are considering refinancing our mortgage to an interest only loan (and making both interest and principal repayments) with a company called Advantage Direct Finance. Does anyone have any experience with this company or with interest only loans in general?

    Thanks.

  2. #2
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    No sorry but interested in people's answers about an interest only loan too

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    We were paying interest only on our first homeloan. The good bit is that your repayments are less but thats about it. So, I guess it is good in the shortterm but not the long. it is depressing getting statements and seeing the amount owed go UP!

    I think P&I is better if you can afford the repayments. Interest only loans are generally allowed only for a set period eg. 3 years or something arent they?

  4. #4
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    Hi,

    Thanks for that. Actually the broker didn't mention a fixed period so that's a good question for us to ask him.

    A

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    GOod luck with it....Im not expert, that was just our experience It is definately cheaper in the short term with repayments. Just check how much cheaper also....it might not be a significant amount depending on the amount of your loan

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    thanks

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    We have 3 houses and the one we live in, is p&i and the other two are investments. The two investment ones we have interest only. But the only reason is that they are for a tax deduction.

    Yes interest only are normally for a fixed time. I would really look in to it before doing it. If it was me peronally i wouldn't make my home an interest only loan, but that is just my opinion.

    Good luck.

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    We have an interest only loan with ING. The interest only is only for the first year though and then goes up to interest + principal. We have been paying heaps extra though, but it has given us the flexibility we need while I'm off work....

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    I have never heard of them but did a google search and realized they are in VIC. I only know lenders/brokers in QLD & NSW.

    Interest loans have there pros and cons. I currently have all interest only loans for two reasons. The payments are lower by alot of money (around $300 a month less for a $460k loan) and I can always make bulk payments against the principal whenever I want.

    If you get a interest only loan you will be able to get it fixed for 1-5 years then it reverts to P&I.

    Make sure that you get a few different options presented to you by the broker, I would be asking for at least 2-3 options from different lenders.

    Goodluck

  10. #10
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    Please do your home work on any broker, check that they belong to MFAA and or FBAA and COSL. You can look this up online.

    Also if they are looking at interest only please check that they have not put you onto a line of credit, these can be good for some people and horrendous for others and put people in a very bad situation.

    You will find there is not much difference between interest only and principal and interest, if you are owner occuppied then you really should be on principal and interest to try to gain some value in your property plus it gives you a little room to play if you need the additional money later.

    Here is a example of a $250,000 home loan at a interst rates of 8.6% over 30 years - Interest Only = $21,500yr - Principal and Interest = $23556 so as you can see the difference is a whole $2056 extra thats it.

    If the broker is just trying to get your business by offering cheaper repayments then you might not be better off, please do your homework.

    If you want to ask any further questions you are welcome to PM me.


 

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