WHEN BUYING A PROPERTY WHAT IS THE COMMON TYPE OF LOAN EVEYBODY IS TAKING OUT ? IS IT INT/PRINCIPAL OR INTEREST ONLY OR LINE OF CREDIT/OTHER ?AND DO YOU USE YOUR OWN HOME AS SECURITY – HOW CAN YOU BUILD PROPERTY PORTFOLIO WITHOUT USES YOUR OWN HOME AS SECURITY ? ANY SUGGESTIONS WOULD BE GREAT
THANKS
MITCHHi Beetle, welcome. As a personal choice, we use I/O loans which we can convert to P & I in the future. The reason for us is that we have more cash flow. We have a couple cross collateralised with our current home, will probably refinance out in time as they are gaining equity and our home will then be free. Also have a L/C against the home and separately against 2 other properties so if something comes up we have the finance and don’t have to chase same, or e.g. an auction.
The L/C is a good idea if you’re going to buy/reno/sell.
That’s just the way we have done it in a fairly short space of time, 2 years, but just wait for the good thoughts on the forum from the more experienced.
AnnaMitch,
There are many options available.
One strategy I often recomend is to borrow 20% plus costs against the family home then borrow the remaining 80% against the IP. This second loan should certainly be IO and so should the first if there is any home loan debt still outstanding (not inc the 20% above).
There are many ways to skin a cat and I would recommend you speak to a broker to find out a strategy that suits you,
Good luck,
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.
Most IO loans allow regular principle repayments so why not go for IO and you can have it both ways?
Cheers
Stu
Hi Stu,
Can you pls explain how the IO loans with principal repayments works pls.[
]Thanx,
Del
IO loans require the payment of the monthly interest component only. You are permitted to pay additional into many IO products. As much or a little as required. The Principal is reduced and the interest component decreases accordingly.
This money can be redrawn as required – important to redraw it for deductible purposes or the ongoing interest bill has to de divided according to tax deductibility.
Hope this makes sense.
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.
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