Hello all and thank you in advance,
I am new to investing and I am planning to buy my first IP in the form of a townhouse in Muswellbrook for about $190,000. I do not have any other properties or debts of any sort (if this counts for anything).
Now what I have learnt thus far (please please please correct me if I am wrong!!!) is that it is not beneficial to pay down the loan as quick as I can…nor is it ideal to have a redraw facility or to be paying P&I.
The most ideal way from what I can gather and have read is to have an IO account and have an offset account to put my funds in to minimise the interest payable.
I have made endeavours to get such a loan however I keep being told that the maximum period I can have an account without making P&I payments is 5 years?
Is this true and if so what do I do after the 5 years?
Am I best off using my above theory and getting a loan to suit or is there a better method out there???
Thanks again guys,
Dean.
Hi Dean
Firstly welcome to the forum and I hope you enjoy your time with us.
Yes certainly Interest only with 100% offset is the ideal way to go subject to a couple of provisions.
Had an enquiry from a forum client only last week with the same question and when we looked at their likely disposable month income post expenses the amount available to save was minimal. With a loan under 250K the interest rate discount and the cost of the offset account didnt make it a viable strategy.
Away from this case Yes for most of our clients we recommend this structure as the way forward.
In regards to the maximum term you can have as an interest only loan then it is more than 5 Years and in fact regularly we do a 10 year term or even an evergreen loan for 25 years however will depend on a couple of points.
Further hard data would be required in order to provide a full structured response and recommendation.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Had an enquiry from a forum client only last week with the same question and when we looked at their likely disposable month income post expenses the amount available to save was minimal. With a loan under 250K the interest rate discount and the cost of the offset account didnt make it a viable strategy.
Thanks for your reply
By the above quote do you mean the amount of money your client would have available minus there monthly expenses? In my scenario my current expenses are a bare minimal and I have no other debts etc….Does that mean an IO loan with 100% offset is still suitable?
Also am I best off getting such a loan from one of the big banks or am I better off finding a smaller lender?
Thanks for your help,
DeanHi Dean
It looks like you've done your research – you're certainly on the right path.
Why not give Richard a buzz and ask him to look into your situation. It's only a cost of a phone call and you will have an expert sorting out your finances whilst you can spend time actually looking for your property.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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