Hi guys….
For an investing property (+ cashflow properties would be the way I would like to head) what sort of loan do you guys go for, principal and interest or interest only?
If it is interest only, when do you come to own the property, what is the thinking behind it to use IO?
Don’t you suppose to grow your equity quicker than your debt?
I am a bit confuse…would really like to know what people do to grow their wealth.I truly appreciate your time and help.People who wish to buy multiple properties do so with IO loans to maximise cashflow and tax deductions.
They aren't worried about owning them all 100% until much later.
Inflation reduces the debt. 30 years ago property cost $30K – would you be upset if you owned 10 properties with $300K debt between the lot? Sell one place on retirement and own 9 fully paid off?
Your concerns are normal and are a mindset taught by our pareents and grandparents. get past them – times are different today.
Does this make sense?
Cheers,
Mortgage Hunter Thank you very much for taking the time and reply to the post.
It sure makes sense and I have to agree with your point of view.
Is there any associated risk with doing so?
Thank you once again.
Great question. If you had a loan of $300,000 (with today's interest rates) how long would it take approx to pay down the interest before you started paying principal? Tara.
Tara30 wrote:Great question. If you had a loan of $300,000 (with today's interest rates) how long would it take approx to pay down the interest before you started paying principal? Tara.Doesn't really work that way Tara.
Whatever the balance is – the interest is charged on that.
Dear Tara,
Basically if you dont bring down the principal, you will be paying interest forever without affecting the principal at all. Thats on a Interest loan only.
hi swifteagle
for what's its worth.
I use IO for all my developments and IPs for the exact reasons stated above ("to buy multiple properties do so with IO loans to maximise cashflow and tax deductions…etc")PS: My PPR doesnt have much remaining on it, but it is the only property I have that is P&I.
H
You must be logged in to reply to this topic. If you don't have an account, you can register here.
