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$120bn of interest-only mortgages to go P&I

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Your Investment Property | 28 Nov 2018, 09:45 AM Agree 0
Around $120bn of interest-only mortgages will revert to principal-and-interest loans over the next three years – and many borrowers won't qualify to refinance under stricter new lending criteria
  • Interest Only Hero | 28 Nov 2018, 11:40 PM Agree 0
    I don't like regulators telling me or the market how we should manage our investments or personal finances.
    I.O. loans for investment have a place to play in the market place, especially for investors managing their tax arrangements and cash flow to improve their return on investment, which is no different that investors in other asset classes, business owners or pensioners trying to maximise their government benefits.
    There are to issues around the I.O. Vs P&I loans that a lot of commentators are mixing up, one is cash flow and the other is equity.
    It is acceptable to have one loan I.O. and have another P&I, while concentrating on paying down the P&I loan and maintain the balance on the I.O. loan. There are a number of reason for doing this, one is for tax planning, others could be for estate planning, future development, personal preference or family reasons.

    Something else to keep in mind, when borrowers pay back their loan with P&I repayments, the lender (banks) receive a higher monthly income or a higher return on their investment, the money they lent you on your loan.
    So is there another motivation for forcing borrowers to convert to P&I loans.

    An obvious consequence of these credit restrictions is they will put many families, average mum and dads into financial hardship.
  • Margaret | 30 Nov 2018, 09:42 AM Agree 0
    I like your response. I am on a pension. My IO loan has enabled me to be able to meet my basic needs and feel confident about it to a degree. This doesnt include anything more than minor home maintenance. With principle and interest only i am unable to cover the cost of food utilities rates and medical. The rental market is too high for those on a pension to maintain. I am hoping to find work. I am over 65.
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