Hi about to buy my 2nd IP and I’m still a bit green about this topic. What are the pros and cons of a 25 or 30 year loan for an IP?
Unlikely you will get a 25 or 30 year interest only term so relates solely to the balance of the Term once the IO period expires.
I would go 30 years as long as serviceability is not an issue.
In saying that i would rather go 10 years interest only over 5 and even be happy with a 20 year term to achieve this.
Richard Taylor | Australia's leading private lender
Go as long as possible – as you can always pay extra down the track if you want to.
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
also better from a cash flow perspective. 30 year option will give you the option to pay more if you want to, and less if you need the cash somewhere else
Richard
ING has a new 30-year I/O home loan
GOM they do an GE have a 40 year term but i was saying in the main most IO loans have a limited term of either 5 or 10 years.
Richard Taylor | Australia's leading private lender
It is about opportunity cost, the shorter the loan term, the less money in your pocket. This means you have reduced the available money for further acquisitions. Wealth is created by the collection of assets, and the payment of assets is merely incidental to wealth creation. In summary: The longer the better……
Yep, my take on loan term is to go for the longer one but feel free to pay it off quicker as long as the loan allows for this. Thus flexibility is optimised.
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