Should I switch to interest-only to lower payments & keep redraw access?

S

sillytallbite125

New Member
Hey everyone,

I've got a $440k mortgage right now at a 5.34% variable rate, paying both principal and interest. I've built up around $400k in equity. I'm not really looking to pay down the principal any faster, and I've been thinking about refinancing because things have changed for me over the past 3–4 years.

My main goal is to lower my weekly repayments to ease the financial pressure a bit. But I also really like having access to a redraw facility. From a bit of research I've done, switching to another lender doesn't seem like it would save me much each week.

So, first question—if I switch to interest only,.will I lose access to my redraw?

Second, I'm thinking about getting a new car. Should I refinance my mortgage to cover the car, or take out a separate car loan instead?

Thanks for your help!
 
That's a really competitive rate you've got. Honestly, the main way to reduce your payments more would be to extend the loan term back to 30 years.

Going interest only is another possibility, though it can be a bit more complicated for a home you live in. If you meet the bank's criteria and have a good reason for it, it’s definitely achievable. Just keep in mind that lenders often offer a lower borrowing amount with interest only compared to principal and interest.

You could also consider adding your car loan to your mortgage. That way, you’d pay the lower home loan interest rate and have more freedom with repayments. On the downside, you might end up paying for the car over 20 years or more long after the car itself is gone. There are ways to structure it so you pay it off faster, but that will depend on how much you’re able to borrow.

Ultimately, it comes down to finding a balaance between lowering your monthly payments and taking on more debt. I work as a broker, so feel free to get in touch if you have any questions or would like some help figuring this out.
 
Just so ya know, interest only loans usually have a slightly higher rate, so the diff in repayments between that and P&I is pretty small

If you've had t he loan a few years, refinancing out to another 30 years can make your repayment drop again

And when you do that, you can roll the car cash out into it that's the best way for your cash flow tbh.

Heads up though, if you do the car this way, you'll still be paying it off long after it's totally done for...
 
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