All Topics / Finance / Loan Information?

Viewing 4 posts - 1 through 4 (of 4 total)
  • Profile photo of Da ManDa Man
    Member
    @da-man
    Join Date: 2004
    Post Count: 37

    Hi folks,

    Was wondering if someone could post a link to some information on different loan options:

    ie: Interest Only v Principal + Interest
    Variable v Fixed

    Would just like some easy to read, bull<edited>-free insights WITHOUT vested interests.

    WOuld be most grateful if you could help.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    I suggest you do some searches as this has been discussed many times before.

    Sphisticated investors tend to choose the IO model as it allows more cashflow and flexibility. Even with IO you can make principal repayments if you choose. These are most effectively directed into an offset account rather than off the loan.

    Similarly many people choose var loans unless there is strong indications of multiple rate hikes pending. Anectodately I hear that with fixed rates the only advantage gained is some peace of mind for those that need it. Typically most borrowers end up paying more for the privilege of fixing. Few actually pick it well and pay substantially less.

    Do you have any questions from all that?

    Cheers,

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of Da ManDa Man
    Member
    @da-man
    Join Date: 2004
    Post Count: 37

    Cheers for that.

    What do you mean by “sophisticated” investors.

    And if IO – then how does one develop equity in the property?

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Equity is built in two ways.

    Firstly by growth in the intrinsic value of the asset due to inflation.

    Secondly with your savings. And rather than putting it into PI loan I suggest keeping it in an offset account – this lets you use it as you wish and not compromise the deductibility of the loan.

    I refer to sophisticated investors as those who are experienced and have been in the business for a while. They generally see cashflow as being more important than reducing the loan.

    Remember it isn’t the size of the debt that is important – It is the cost of the debt that matters.

    Cheers,

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.