In order to have a positive cashflow does the mortgage have to be interest only repayments. I’m a bit confused as to which is better; minimise the initial loan amount or have the cash in hand for another property etc.
Steve, do you do interest only mortgages?
thanks,
giladHi Gilad,
In order to have a positive cashflow does the mortgage have to be interest only repayments.
It really depends on what you want to do. There are many properties out there, that can be P/I loan and the rental still exceeds all expenses and payments. You are still able to pay down the loan, and still get cash in your pocket at the same time, with out having to put in a cent at all.
Though, if you are looking to have access and ability to have more funds available, I/O loans are great, but it will really depend on what you want to achieve and have one day.
Though for each person, depending on their circumstances and the property, it will depend on what outcome they want to achieve.
Cheers,
sisHi Gilad,
All of our properties are positive cashflow and they are all Principal & Interest.
We chose P&I so that we can reduce our debt. If prices do drop, it is like an insurance policy. We would hate to be in the position of being forced to sell a property and still owe a debt on it!
Commercial property is different though. Most people will have Interest Only, as P&I would cause it to be negatively geared.
Regards,
Del
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