Floating Interest Only Revolving Credit Mortgage - is it possible with Westpac ?

[iwik]

If Floating Interest Only Revolving Credit Mortgage - not possible with Westpac ? Is it available through

any other bank ?


Is floating interest only available at Westpac ?



Cheers

iwik

[Rosco]

Hi iwik,

A revolving credit facility is normally interest only and at a floating rate. I'm pretty sure Westpac do this, and all main banks.

There are a few different options

- NZ home loans do a revolving credit facility, where the limit keeps reducing so that you slowly pay it off
- BNZ and Kiwi bank offer total money products. so if you have mortgage $100k and $20k in savings, you only pay interest on the $80k difference

Be careful about having too much on floating, as if interest rates go up, you might get hurt.

Ross

[gavinc]

Hi iwik,

A revolving credit facility is normally interest only and at a floating rate. I'm pretty sure Westpac do this, and all main banks.

Ross

Are you sure? I have a revolving credit mortgage and it is P&I. With ANZ

[iwik]

Cheers Ross

Yeah that's right remember now , interest
is calculated daily on the balance , principal
comes off each week if you pay more than weekly interest or pay a lump sum

[Rosco]

Are you sure? I have a revolving credit mortgage and it is P&I. With ANZ

Are you sure its a revolving credit?

You can have a P&I mortgage at floating rates!

A revolving credit is normally say you have a limit of $200,000. You might only owe $30,000. You pay interest each month, but the $200,000 balance just stays the same. The $30,000 goes up and down as money goes in and out.

Not sure how you would pay principal on a revolving credit (except as NZ home loans do, by reducing the limit) - do you take out say $500 from the revolving credit as the payment, then the bank puts it back in as the principal payment?? Doesn't make sense!

Ross

[gavinc]

Are you sure its a revolving credit?


Ross

ANZ call it a Flexible Home Loan. When it was NBNZ they called it a revolving credit.

My limit is $380K, If to make thinks simple I paid off a lump sum of $30k then I would have a $350k mortgage, pay interest on $350k and if I wanted to I could re-borrow the money I had already paid off.

An ANZ Flexible Home Loan combines a mortgage with a current account. It’s ideal if you need flexible access to credit or if you’re a good money manager and want to pay off your home loan sooner.

• You have access to credit for any purpose at a competitive flexible home loan interest rate.
• You can use any extra money you have to reduce your home loan balance and save on interest.

[Learning]

BNZ total money let's you put money in and take it out as much as you like up to it's limit. Only pay interest on the end of day balance. But you can't reduce limit (pay off capital) without restructuring the whole loan. I use it in conjunction with a standard fixed mortgage. Whenever the total money is looking like it might go into credit I make a lump sum payment off the fixed.

I never could see the point in having a savings account paying 4%, if you're lucky, when I have a mortgage costing me 5%+.

[Rosco]

ANZ call it a Flexible Home Loan. When it was NBNZ they called it a revolving credit.

My limit is $380K, If to make thinks simple I paid off a lump sum of $30k then I would have a $350k mortgage, pay interest on $350k and if I wanted to I could re-borrow the money I had already paid off.

An ANZ Flexible Home Loan combines a mortgage with a current account. It’s ideal if you need flexible access to credit or if you’re a good money manager and want to pay off your home loan sooner.

• You have access to credit for any purpose at a competitive flexible home loan interest rate.
• You can use any extra money you have to reduce your home loan balance and save on interest.

Hi Gavin,

But where is the Principal (P part in P&I) that you are paying? You are obviously paying interest, but I still can't see how you are paying principal. Following your example isn't the revolving credit limit still $380,000 so you haven't paid any principal permanently!

Every week/fortnight or month is the bank making you make principal payments to the revolving credit? ie if your loan is at $350k but limit $380k, are they still forcing you to pay $500 per fortnight into the loan as principal payments?

Ross

[gavinc]

Hi Gavin,
Every week/fortnight or month is the bank making you make principal payments to the revolving credit? ie if your loan is at $350k but limit $380k, are they still forcing you to pay $500 per fortnight into the loan as principal payments?

Ross

Are they making me pay say $500 every fortnight as a principle payment - NO . But if I wanted to I could.
Example.
400k @ 6% = 24K interest per year. Every month I get an interest bill for $2000.00 and I must pay that. So if I choose I could pay no principal only the 2k each month and after 20 years I would still owe the bank 400k.
But I could also choose to pay off the loan completely over 20 years in which case the monthly payment would be the 2k plus a principal amount.
I could also choose to pay off the loan completely only at 1 month, or 1 year, or 5 years whatever suits me.
When I pay the loan down below the limit I can redraw up to the limit again without asking the bank to approve it. I haverepaid to Zero and re-borrowed the full $380k again to purchase a rental property or for whatever you like.
Clear as mud?

[Rosco]

Are you sure? I have a revolving credit mortgage and it is P&I. With ANZ

Hi Gavin,

Sorry to be picky, but it helps with other investors understanding to make sure things are clear.

From your last comments, then your revolving credit is no P&I. It is interest only. Yes you can make principal payments, but you are not forced to every month, whereas with a P&I mortgage you are.

So Iwik, going back to your point, I would go back to Westpac as I think your understanding is wrong, or the banker hasn't quite explained something right.

Ross

[gavinc]

From your last comments, then your revolving credit is no P&I. It is interest only. Yes you can make principal payments, but you are not forced to every month, whereas with a P&I mortgage you are.

Ross

You are not being picky just pedantic. But I can see the reason for it so no problems.
In my view the a flexible home loan (formerly called revolving credit mortgage) is ideal for property investors (providing you only charge rental related property expenses to it) you can pay as much as you like, when you like, tailor the length of the loan to your personal circumstances. The biggest plus is not having to go running to the bank to make changes to the term, amount etc.

[iwik]

Hi Gavin,

Sorry to be picky, but it helps with other investors understanding to make sure things are clear.

From your last comments, then your revolving credit is no P&I. It is interest only. Yes you can make principal payments, but you are not forced to every month, whereas with a P&I mortgage you are.

So Iwik, going back to your point, I would go back to Westpac as I think your understanding is wrong, or the banker hasn't quite explained something right.

Ross

I'm on the money Rossco - might not have explained it well but that's how my revolving credit account worked years ago, you reminded me.
i.e $200,000 revolving credit account - get charged interest daily on the $200,000 - put lump some of $20,000 on I now only pay daily interest
on $180,000 and can draw back to the $200,000 anytime i wish.

[Simmo]

If Floating Interest Only Revolving Credit Mortgage - not possible with Westpac ? Is it available through

any other bank ?


Is floating interest only available at Westpac ?



Cheers

iwik

Mine through Westpac is exactly that ^^^. It's called a "Choices Everyday".

Just don't pay the carded rate!

[charlotte30]

Mine through Westpac is exactly that ^^^. It's called a "Choices Everyday".

Just don't pay the carded rate!

Ditto for me. Same loan with Westpac with a higher limit. I also have some fixed loans but prefer the "Choices Loan" for the flexibility. I can make new purchases and/or pay it down. It helps with forward planning.

Cheers
Charlotte30