Oct 09, 2009 10:07 am
Is this true that we can't make any changes on the repayment loan during construction?
(ie. change from monthly to fortnightly or make any extra repayment)
Currently we are with ANZ Simplicity Plus package... Any info? TIA
Re: No repayment changes during construction???2
Oct 09, 2009 10:50 am
I'm pretty sure that's correct. You only pay interest on the loan during construction and I'm sure most banks only do it monthly as it changes rapidly with progress payments.
Our bank is opening an offset account for this reason and all our savings will go into the offset account, which will help to reduce the interest we pay, but it won't help with paying extra on the loan if you know what I mean?
Re: No repayment changes during construction???3
Oct 09, 2009 11:27 am
If you are good at saving and you have an offset account, it makes no difference as to the frequency of payments, ie. monthly or weekly nor to the amount of the repayments.
Just keep saving up what you can and this makes even a bigger difference than any changes to repayment frequency or increasing your repayments.
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Re: No repayment changes during construction???4
Oct 13, 2009 7:20 pm
Anz handle their construction lending a little different to other institutions. As during the construction period the lending is Interest Only they have a slightly different method of collection.
Like most they calculate their interest daily and charge it monthly. Unlike other lenders however, this is not charged to the loan itself. These monthly interest charges need to be redirected to an alternate account. Such as a transaction account etc. Kind of like a direct debit but not to give you an idea. ANZ policy states that Interest Only charges need to redirected to an ANZ account not the loan.
In this situation the 'Interest Charges' will always be monthly. And like any loan you need to make sure you have the funds available at each interest sweep. So you could transfer funds into the 'ANZ ACCOUNT' each fortnight from your pay. Providing you have enough funds at the end of the month for the Interest Charge Redirection.
As for having this other account as an offset account. This is a very good idea and you can use this with some lending institutions and in fact some products at ANZ. Unfortunately, the Simpliciy PLUS product does not have the feature of an Offset account being attached.
Hope this info helps out.