I.O. / P&I / repay own mortgage quicker??

Viewing 9 posts - 1 through 9 (of 9 total)

wilandel
Member
@wilandel
Join Date: 2003
Post Count: 761
July 1, 2003 - 6:27 am
Hi everyone,
I’d like a bit of advice. []
(1) Presently, we have our I.P. loans set up as P&I. as we want to reduce debt ASAP.
(2) Our repayments come out of our Mortgage Offset acc, and rent received goes into that Offset acc. Theoretically, it should increase in cashflow in time.
(3) We still have our own mortgage on PPOR.[]
Would we be better for our new I.P’s to make them I.O. and with the extra cashflow in, reducing our own Mortgage quicker, which isn’t tax deductible.
Help please, seems obvious to everyone else probably!!!!
Thanks guys & gals,
Del
Steve McKnight
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@stevemcknight
Join Date: 2001
Post Count: 1,763
July 1, 2003 - 6:39 am
Del…
Read the latest newsletter!!!
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
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Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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Success comes from doing things differently
ksheather
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@ksheather
Join Date: 2002
Post Count: 33
July 1, 2003 - 6:45 am
Yes it is a good idea Read my lips!
Stuart Wemyss
Member
@stuart-wemyss
Join Date: 2003
Post Count: 598
July 1, 2003 - 8:35 am
Hi Del
In short – yes, always better to divert all free cash flow to reduce non-deductible debt first. If you have a home loan then I would definately only repay interest only on IP loans.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.au
maximus
Member
@maximus
Join Date: 2003
Post Count: 189
July 1, 2003 - 9:16 am
Ditto. I would definately pay off the PPOR first.Just be careful of possible fees converting from P&I to I/O on your investment loans. I had a question re P&I and I/O myself but my situation is different to yours.
Regards
Marty[]
wilandel
Member
@wilandel
Join Date: 2003
Post Count: 761
July 1, 2003 - 10:49 am
Thanks Guru’s,
I.O. it is now! []
Sometimes it’s easy to forget the BIG PICTURE !![]
We should repay our PPOR debt before our I.P’s.
I will leave our loans that we already have as P&I, but for the ones under contract, they’ll now be I.O. until our mortgage is paid. That will give us a good mix also.
This forum is great to reassure you of what you think is right.[:X]
Yes Steve, I should have read the newsletter first.[]
Have a good nite,[|)]
Del
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
July 1, 2003 - 1:28 pm
I agree. Definetly go IO on any future IP. And I would change teh existing ones to IO as well – as long as the fees in doing so are too much. And I hope your mortgage offset account is set up against the PPOR loan.
Terryw
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
wilandel
Member
@wilandel
Join Date: 2003
Post Count: 761
July 2, 2003 - 1:27 am
Terryw,
Yes, our offset a/c is set up against our PPOR. (At least we did that right)!![]
I’d be happy to change our prev. I.P’s to I.O. however, they are at fixed rates. Can you still do it, or does that change things?[?]
Thanks,
Del
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
July 2, 2003 - 5:51 am
Fixed rates have dropped (probably) since you took out the loans. Therefore will have probably have to pay the bank a large penalty for getting out. May not be worth it. (I recently paid more than $3000 exit fee on one of my 5 year fixed loans).
It would hurt to ask your lender, if you could keep the loan in place and just change it to IO. they may do it with no change. Or you may even end up saving if you break the loan and then go for a lower rate.
Terryw
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au