How We, as Brokers, Use 10-Year Interest Only Terms to Benefit Your Pre-Retiree Clients
As brokers, our goal is to tailor lending solutions that align with our clients’ current stage of life and future plans. One powerful strategy we now have at our disposal is access to 10-year Interest Only (IO) loan terms on Pro Pack products—double the previous maximum of 5 years and available for both investors and owner occupiers.
Key Benefits for Your Pre-Retiree Clients:
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For new clients, we can arrange up to 10 years IO with no assessment required during the initial term (note: extending the term past 5 years, up to the maximum 10, will require a further assessment).
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For your existing IO clients looking to extend their IO period, we assist with the necessary full serviceability assessment to help them take advantage of this extension.
Sample Case Study: Jeffrey & Paula
Let’s look at how we would use this for clients like Jeffrey (60) and Paula (55), who are starting to plan for retirement at age 70.
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Current position:
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Their home is owned outright.
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They owe $600,000 on an investment property (worth $1.2m), with 8 years of principal & interest (P&I) repayments already made.
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Monthly repayments: $4,081 on P&I (loan started at $685k).
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Combined minimum household income needed: $95,000 (+$650/week rent) to pass serviceability.
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Client goals:
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Spend more time traveling in their 60s.
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Retain their investment property longer for expected capital gains, without straining cashflow.
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Our Strategy: Using a 10-Year Interest Only Term
By refinancing their existing $600,000 loan to a 10-year IO loan within a 30-year term, we can drop their monthly repayments to $3,055—a saving of $1,026/month, which they can use to pursue their lifestyle goals or as a buffer in retirement planning.
What We Advise Clients to Consider
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Opting for interest-only repayments increases the total interest paid over the life of the loan. In this scenario, interest paid over the next 10 years would rise by $57,942 (from $308,658 to $366,600).
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However, our strategy unlocks $123,120 in additional cashflow over a decade—giving clients like Jeffrey & Paula more flexibility and peace of mind during their transition to retirement.
How We Add Value
As brokers, we guide our clients through these options—balancing lifestyle needs and long-term financial health—so they can make informed decisions about their mortgage and their future.
PS – This is a recent change to a lenders policy and subject to change without notice – call us to confirm.
