Will the banks allow me to go interest only?

So you’ve recently been to the bank to restructure your mortgage. You’ve asked them nicely to put it on to interest only, and they’ve come back and said no. The Responsible Lending Co have changed bank lending quite considerably. The banks must ensure that they are always putting you into a healthier or better financial position.

Firstly, it’s not impossible to get interest only terms, however there needs to be a justifiable reason as to why you want interest only and the lower expense. A typical use of interest only is someone who is going on to maternity leave. Obviously, they are going to switch down to a single income and that is going to change their financial position. The Responsible Lending Co would be happy with that as a reason.

Another justified reason as to why you might choose to go interest only, and a reason that the banks would be relatively happy with, would be is if you have your own business which you are trying to grow, and you want to reduce your personal expenses so that you can leave as much capital in your business as possible.

If you have an investment property, it’s extremely common  to run the mortgage on interest only, as since each mortgage repayment is interest, it is purely tax deductible.

If you think you have a justified reason to go on interest only for a period of time, but the bank has said no, then please get in touch with me and I will approach the bank on your behalf.

Call me today on 021 662 205 or email ryan.amoore@loanmarket.co.nz