Hi All,
I have just finished reading steves book and understand that positive cashflow from property is one road to financial freedom. However, why take out a loan over 20 to 30 years as opposed to say 5 to 10? Is it because longer loans help achieve + cashflow to then invest in other property due to lower weekly repayments? Wouldn’t it be better to have a shorter loan if you are intending to buy and hold therefore preventing astronomical interest repayments?
Have I missed something?
Thanks,
Ian [?]
The lower repayments is the point. If you pay it in 5 – 10 years you will need to be paying 10 – 20% of the principal each year. This may well prevent you buying property 2, 3… etc
Remember that inflation effectively reduces the loan as well.
Lastly it is wise to take the loan over a maximum term to minimise the minimum repayment you have to make. You can then pay as much as you like but have that minimum to fall back to should times become tough.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Simon,
That’s all I needed to know.
Good advice,
Cheers!
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