with an interest only loan does it last till the sale off the property. or does an IO loan only last for a set time ie 10 yrs then revert back to the tradiational p+i loan.
is this a good idea if i purchase a property with IO and if theres a limit on how long the loan is IO for ie 10 yrs is it better off paying off parts of the princable until the house is yours or dont pay any princable and sell the house when the 10 yrs are up and pay back the princable.
i feel this is the better option because for 10 yrs you will reciece regualer income and at the end receive capital gains this seems to simple am i missing something.
looking forward to any1 who can inlighten the situation
[thumbsupanim]Hi Dragons,
I/O loans do have a limited life (used to be typically up to 5 years – though this is/has changed with the ongoing deregulation of the market) after which banks ‘expected’ you to convert to principle and interest repayments.
At the end of the I/O period go and see your broker and get the I/O period extended with your initial lender and, if they say no, find another lender.
Whether or not I/O or P & I is better is ultimately up to you. We are I/O with our investment loans and will continue to do so while we have non-deductible debt. Thereafter we will reconsider our options.
I/O investors tend to have a growth focussed investment belief and use I/O to reduce outgoings for individual properties thus usually enabling them to hold more property for the long term growth benefits.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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