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Interest only Mortgage issues

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  • Interest only Mortgage issues

    Hi All
    I started property investment about 4 years ago. I now own 3 properties in Auckland, and everything is going well. However, all 3 loans are on interest only, but that will start to change at the end of 2020 (and roll over to P&I). Put simply, I can not afford to pay P&I, the rents will simply not cover it.

    I was told early on that I could keep my mortgages on interest-only by simply refinancing at another bank when the interest only term expires (5 years). My mortgage broker now tells me, this is highly unlikely due to the banks reluctance to hand out interest only Mortgages.

    My questions areā€¦.is this true? Has anyone here got the same problems, and what did you do?

    If this is accurate info, I am in a situation where I may need to sell at least 2 of the homes, or maybe all 3. Any advice would be most welcome.

    Thanks in Advance

  • #2
    Sounds like you are doing well. The good news here is there is plenty of time to negotiate with a number of banks. I don't use brokers, and a good segment of my lending is interest only.


    • #3
      I've always been interest only and whenever the interest-only period ends, I am always able to roll onto another interest-only period.
      I've been doing this for 17 years.
      I've never used a broker.
      I'm with ASB.
      So in answer to your question: I have never had your problem.
      Do mortgage brokers taint investors?


      • #4
        Following the trend I've also had 12 years of intrest only. Through BNZ and no broker.


        • #5
          Have you worked out how much principal you need to pay ?
          If the loan period is long the principal portion is very small and you may be pleasantly surprised how little you need to pay.
          Have you discussed this with your bank manager ?


          • #6
            Four years ago the rents would have been lower and interest rate higher.
            Did you repay a bit of the debt with this profit?


            • #7
              What is your LVR?

              Those able to refinance on interest only such as Bob and Learning may have lower LVR levels, as they have been investing for a longer period and have enjoyed rising property prices, as well as an increase in rents from their purchase date.


              • #8
                Avoiding brokers might be the secret to property investment success.


                • #9
                  Just in the process of testing that as we speak. Just had one rollover and the other one due.
                  Also want to borrow some for reno's that have to be done.
                  Will see how we go. Income ok and LVR just under 50%.


                  • #10
                    Yep only ever had one that did any good and that was way back in the cCountrywide days. Excellent bank they were.


                    • #11
                      As long as your LVR is below 70% across your investment portfolio, and your combined incomes (personal/business/rentals) exceed bank's servicing criteria, you can extend IO to a certain amount up to 10 years.

                      Beyond 5 years IO that's when it can become difficult, depends on the banker, and credit manager.

                      Otherwise, just refinance to another bank, or asks the same bank to redocument the loans back to 30 years (may not fit with certain bank's policy).
                      Gary Lin Property Coaching


                      • #12
                        We like business bankers to be serious interested in our business and not behave like school teachers and stupid people.
                        They do not need the money and if your LVR is well down then why do they play the power trip?
                        Ever meet a wealthy mid-level banker.
                        Lose their jobs and ain't got enough to eat yet behave like they know about creating wealth. Sell you a Kiwisaver and bugger it up, the list goes on.
                        Just lend us the money forever.