My husband and I are about to purchase our first +ve IP. Our Mortgage Broker has suggested we take an interest only loan. Is this what we should do or should we make it pricipal and interest???
any feedback will be appreciatedThankyou[
]Hi jaykat,
Search the forum for ‘interest only’ and see what comes up. This topic has been covered heaps of times and you’ll find everything you’re looking for.
My personal opinion is that IO is the way to go if you’re investing for cashflow.
– Lower monthly payments
– You can still make payments straight off the principal if you wish
– You’ll probably only end up refinancing/redrawing your principal repayments later on anyway, this may incure fees to do so, so it may even be worth putting them aside in a high interest account (such as Adelaide bank – 5% interest, no minimimum term) so you have immediate access when you need it
Hope I’ve helped.
Cheers, Leigh
“If you can count your money, you don’t have a billion dollars”
J. Paul GettyHi,
Generally, most investors will go with Interest Only for the investment property, if they still have a loan against their Owner Occupied Property. The rational here is the interest on the investment loan may be a tax deductible expense (please confirm this with your tax advisor, you do have one don’t you?). Whereas the interest on your Owner Occupied property is not a tax deductible expense. So you should apply as much funds as possible to the Owner Occupied debt to reduce it as quickly as possible.
However, if you do not have any consumer debt or Owner Occupied debt, then you may still go Interest Only (variable rate or split loan), knowing you can make lump sum repayments at any time to reduce overall debt.
The real answer is not here, you must consult a financial planner and/or tax specialist.
Gary Young
Home Loan Connexion
Mobile 0407 64 66 32
Fax +61 7 4636 4841Hi Leigh,
Thankyou for your help, it had helped me feel a lot more confident. Being new at investing in property, it helps to hear other investors opinions.
Thanks again
[]Hi Home Loan Guy,
Thankyou for your feedback. We are currently looking for an accountant to help us. We do have a loan on our PPOR so what you have said makes a lot of sense.
If you know of a good accountant could you please let me know. We are currently living in Brisbane.
Thanks again.[]Interest only with a line of credit.. Much better for the hip pocket and piece of mind….
When you think about it, you take out the loan for 25 – 30 years.. The principal that you will need to pay then after all that tax deductable interest is going to be the equivalent to buying a pair of shoes or something in that amount of time..IO + LOC = GL
Calron the Alcamist
Turning things into gold is fun.
[email protected][]Home Loan Guy is spot on. I would advise you to pay IO on any deductable debt whilst you have any non deductable debt.
Cheers
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hi Jaykat
Why not try Cabreras on the northside 07-3888 6399. Steve there has always been helpful to us.
Cheers Richard
[email protected]There is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Hi Qld’s 007
Thankyou, I will give Steve a call.[
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regards
Katrina.Hi Jaket
I’m in Canberra and will be doing IP’s in Melbourne. I have two accountants. One in QLD and this new one in Canberra. The new one has nine IP’s himself, so I feel pretty confident with him.[
] When I do business with these guys I just email the questions or data.
If you want I can pass you his name.Johnb
Hi JohnB,
That would be great if you could give me his details.
My email address is
[email protected]thanks
Katrina
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