Hey everyone
Thanks so much for the input, I did not expect all the responses so quick and professional. Who needs accountants, lawyers, planners when I have you guys!!
Here is an interesting story about my adventures since the last post. I have been looking all over eastern Melbourne for an IP, as I was coming home last night I noticed a new for sale sign on a unit across from my PPOR (I actually view a unit in this lot before I brought my PPOR) I inspected it, had my building inspector through and have just made an offer tonight, after all the calculations it was thus far the most highest yielding and has great Cap Growth. So hopefully I will be successful.
After all I have read and seen I feel that P&I loans are more effective for IP's. It promotes forced savings (As i think many people will not add the amount of principal payments in a P&I loan into an IO loan) and it increases your equity whilst lowering the % rate. Also lenders will always offer less on IO loans because they can only look at it over a 25yr period and not 30yrs (as 5 yrs is IO) I found I was able to borrow at least an extra 25-30k on P&I giving me access to much better rental and CG properties, making me more money in the long run. Besides you are taking a big gamble that your IP will increase over time faster then the % rates and IO payments. I would rather be forced to pay $ 100-150 pw in principal payments because this can be redrawed whilst lowering your payments.
Thanks again guys for the help!
