Interest only, standard option or not?

If you go for interest only then you can stil turn it into a P&I loan by making payments as if it was a P&I loan.

The advantage is that if at anyone time one runs into some financial trouble one will be able to redraw thw excess payments which have been made.
Sometimes a bit of breathing space can save the day.

Another advantage is that one could utilise the
extra money, kept in one’s pockets because of the lower monthly payment of an Interest Only loan, to pay off other debt (like a credit card) which is at a higher rate than the home or investment debt.

And of course in the case of an investment loan the interest on the loan is tax deductable whilst interest on one’s private credit card balance isn’t so it is to one’s advantage to reduce ‘bad’ kind of debts.

The disadvantage is the possibility that the extra payments one could have made one may fritter away on frivolous things

There is also always the possibility that the lender may possibly change the rules and the redraw facility may be withdrawn.

Or that the lender may ask for either a fresh valuation (which could spell trouble in a falling market) or an updated income statement (which may cause problems for people who may have lost their job).

Pisces

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