Hey guys, Just wondering if you have an interest only loan are you able to make extra repayments towards the principal ?
Also is it best to have Interest Only loans on your investment property/s inorder to free up more cash to save for the next property ?
Cheers..
Yes and Yes!
There may be fees depending on which lender you are through though.
You could set up a mortgage offset account instead of paying off the principal. That way you have access to the cash to fund the next investment.
On the other hand you could pay off the principal on you PPOR and when you redraw to fund your next investment that portion of your home loan becomes tax deductable
IO is generally the best policy depending on your situation.
Agreed. I/O is used by some nowadays as a bit of an 'emergency' way to manage your loan particualrly on your own home. Make the payments as if they are principal and interest, (ie, pay a bit extra in each wwek/month etc) but if things get tight or you have some unforseen expenses, you can make I/O payments while going through this.
As far as making extra repayments go, absolutely BUT if the loan is/was a fixed interest rate I/O loan you may not be alble to, or you will have a maximum amount you are allowed to without penalty.
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