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I want to prepay interest on my home loan for next financial year

Posted by sharonl sharonl
Message 1 of 2 344 Views

I want to prepay interest on a home loan for the next financial year (because my income is high this financial year and will be low next f/year, and therefore my accountant suggested that I prepay the interest and claim the deduction this f/yr). It's a fixed rate, interest-only loan for an investment property.

 

Unfortunately, Bankwest won't accept interest payments in advance (what business refuses payment a year in advance?!). I was advised that the only way it's possible is to refinance to an Interest-in-Advance Loan - involving a FULL loan application process; AND interest would then need to be paid in advance EVERY year; AND break/exit fees would apply to current fixed rate loan.

 

Have other investors tried to prepay interest on Bankwest home loans with success? This is a relatively common accounting/taxation practice and I'm really disappointed that Bankwest can't accommodate what seems like a simple pre-payment of an upcoming known-value expense. 

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Re: I want to prepay interest on my home loan for next financial year

Posted by DanaeC DanaeC
Message 2 of 2 341 Views

Hi @sharonl, I'm sorry to hear you feel this way. I can confirm that the information you have been provided is correct, as the Fixed Rate Home Loan allows you to deposit up to a maximum of $10,000 per year (based on your loan disbursal anniversary date) above the minimum monthly repayment amount. Therefore, paying your interest in advance may incur extra fees. An Interest in Advance loan is a separate product, different to that of a Fixed or Variable Home Loan - I'm very sorry that this is likely not the response you were hoping for.

 

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