Hi,
I am changing an investment loan from Interest Only to P&I.
The bank have offered a 30 year term, but I notice Steve always talks about 25 year terms.
Is there something I should be wary of?Rgds
Can I ask why you are changing from IO to P&I?
25 years instead of 30 yrs means larger payments, but you are paying down your loan quicker. That is all, quite simple really…..
Why not go for 30 years as the repayments would be lower, and then pay extra off when you can. That way you have a choice.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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Thanks for that.
Changing to P&I as am no spring chicken and want to make sure I pay off some as I go.Rgds
irishaus,
I started out with a ten-year loan- but had no clue as to property investing- glad I did back then though- it means I had my first place nearly paid off when I sold it- of course, that was pre-boom and properties were cheaper. If i had a 10-year loan now, I couldn’t cope with repayments.
I then got informed it is better to take out a loan for a longer period. The only thing that will be stopping people getting long-term loans is age, I guess.
You can get a long-term loan and then pay off much extra from it, so you pay it out in around fiteen years anyway. I know some people have a perspective that you don’t ever pay a cent extra on loans, but for me, it’s all about gaining equity and paying down loans whenever possible- it also means you can borrow more as you *own* more.
25 or 30 year loan is much of a muchness, probably- it all depends on what you can afford. A shorter loan period will mean you inevitably pay less interest. Think about your income- are you looking for tax deductions and tax returns? Or are you looking to own assets?
kay henry
irishaus,
sounds abit irish to me (pun intended)
why bother changing your existing loan when you ‘should’ be free to make additional repayments into you existing loan without penalty.
unless its an i/o fixed loan – then the rules change.
but i/o variable products generally allow principal reductions either as a lump sum or as a regular repayment.
any broker or financial calculator savvy punter can work out the p&i repayment for any loan, loan term and interest rate – easy peasy
seems like a lot of bother to do something you should be able to already do.
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or dad first) ~~ 1900 hot broker ~~Hi Iris,
I am with Brahms here – interest only and make additional repayments. If you want the property paid off before you retire then make sure you make the repayments necessary to pay out the loan as you retire.
As an aside have you considered the possibility of doing a ‘Jan Somers’ and leveraging off your existing property for growth and then sell a couple at retirement to pay oout your debts.
Just a thought.
Derek
[email protected]Property investment advice and researched property in quality locations available.
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