Hi Guys,
Please select either one of the following statements + reason if you could.
a. Borrow on a 15yr loan term, minimise cash flow, pay less interest and own property sooner
b. Borrow on a 30yr loan term, maximise cash flow, pay more interest and own property laterCheers,
KenHi Ken,
I personally would have to pick (
but I also would be looking into a product that I was able to pay extra off without any penalties.
Sharlene
[email protected]ditto here too… either LOC or offset account…. get the best of both worlds i believe then & covers against life's unfortunate speed bumps a little also
I know people making good money and save like mad but absolutely hate borowing money. They would never consider lending money for investment purposes. Only to pay for there own home and they still only bought a very modest house in average area. Choice (A) would suit them.
But many people understand borrowed money and good cashflow increase wealth and to them option ( would be the only way to go. Me tooI would use a third option being hold property on an interest only loan with an offset account attached,
I would still make the payments as if I were paying it off but I would place the extra funds in the Interest offset account rather than off the priciple of the loan,…. this way I can take the funds out later and use them for personal use ( your private home ). and still retain the maximum amount of your debt as tax deductable debt,
the lower repayments on the interest only loan will also mean you can borrow more than your cash flow would allow you to if you were paying priciple and interest, there by allow you to by more property,
as I have said many times if you have personal debt such as the family home which is not tax deductable,…. why pay off your investment loan with dollars that could go to the non tax deductable loans
If you are hell bent on clearing debt though, put the loan over 25 years so your cash flow as far as the banks are concerned is good,…. but make extra repayment as if it was a 15 year loan. that way you have the best of both worlds,
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