Rates of interest are a definite topic that is hot now. Up to recent years, mortgage loan prices had been exactly the same as investment loan rates. Throughout the last month or two, banking institutions happen interest that is slowly increasing to the level where Interest just (IO) loans are 1% greater than Principal & Interest (P&I) loans. Having a 100 foundation points’ price distinction, one must start thinking about whether or not it still makes monetary sense to spend IO on your initial investment loan.
Quick recap on why that is happening…
APRA (the regulator) wishes home loan clients to start paying off financial obligation and for that reason they’ve directed banking institutions and loan providers to considerably lessen the number of current and brand new IO loans. Relate to my blog that is prior explaining instructions and way to banking institutions and just why IO loans are actually higher priced than P&I loans.
Can I spend down my mortgage loan before you make major repayments on my investment loan?