In looking at the banks "how much will my repayments be" calcs. It seems that interest only doesn't make much of a difference in the weekly repayments?
What are your thoughts on this?
It is a fact that the minimum principal payment required by the lenders is low.
What sort of thoughts are you after?
Hi Simon,
Well for instance if i go to a standard loan calc on the net. and punch in:
Loan Amount: 250K
Int: 7.25%
Length: 25 years
Freq: Monthly
Repayment Type: Interest onlyMonthly repayments: $1510.42
and
Loan Amount: 250K
Int: 7.25%
Length: 25 years
Freq: Monthly
Repayment Type: P&I
Monthly repayments: $1807.2That extra 300 bucks is not a big monthly diff at all really is it? id rather pay that extra and be paying off the debt.
Thanks
Joel
If your are paying PI on an investment property, than that is $300 extra that could be coming off your home loan instead = saving you interest and tax.
Or
If you have no home loan, that is $300 extra per month that you could be using to pay for further investments.
All depends on what you want to achieve.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hello Joel
It seems to me that to get the best of both worlds and the most flexibility you would take out an IO only loan with a 100% offset account. You would then put the extra $300, or better still, everything you earn, into this account. All your household and other expenses could be paid out of this account but while the "expense money" is there, it saves you interest.That way you are saving yourself interest by "effectively" reducing the loan and at the same time keeping your funds free for further investing. You can always use these saved funds to make a lump sum repayment at the end of your IO only period if you should want to.
The other advantage is that if it's your PPOR that you are currently buying and you turn it into an investment property at any stage you can simply use these saved funds in the offset account to buy your new PPOR. All the interest being charge on your original loan would then be tax deductible.
I think ANZ has a loan for up to 30 years where you can pay IO only for up to 10 years with 100% offset. I don't know if that's the best one but either Simon or Terry certainly would.
Hope this helps
Elka
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