All Topics / General Property / Pay off new PPOR or just pay interest!

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  • Profile photo of PosEnterprisesPosEnterprises
    Join Date: 2006
    Post Count: 290

    Hi everyone what are your thoughts on paying off your own home.

    would you pay only Interest on the Loan or would you also pay Principal.

    Profile photo of ErikHErikH
    Join Date: 2007
    Post Count: 118

    My view is that the family home is something you want as safe as possible and ideally without any debt, however at the same time most people need to use the equity in their home to get started with investing (in property) and creating wealth. So whether you pay off the loan on your home or use the funds to continue investing would depend on your risk profile and your investment progress to date. When you're young and still have a long way to go on your wealth creation journey I would say you use all the money you can to create wealth. You can ofcourse do P+I and then when you have created sufficient equity use it for investment purposes…

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    What about getting IO and using a 100% offset account to keep all your cash. That way you will save the same amount of interest (or more) and can transfer the money into the home loan if you want to.

    The advantage is if you move out you will have a high loan with the cash available without tax implications

    The disadvantage is that you may be tempted to spend all that cash 'sitting' there.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

Viewing 3 posts - 1 through 3 (of 3 total)

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