Hello all,
I need some advice please….I am trying to ascertain some +CF properties and one of the things I need to do is to calculate the interest costs on borrowings. I don't know how to do this….can someone please explain the calculation to me. THanks
good morning
go to http://www.financingproperty.com.au/resources
Very easy to navigate via these calculators.
Work out how much you will actually be borrowing, including from other facilities you may have such as Lines of credit etc that you may be using to fund purchasing costs / deposit etc. THen to that figure, times it by the current (or any) interest rate % and voila, you have the interest only amount that you would pay over a year. Thats the quick and simple way to see if it is worth looking into further.
CheersOn a basic calculator, even the one on your mobile.
purchase price % interest rate
eg $350,000 x 7%
= $350,000 x .07
= $24,500.Unless you have a cash deposit to put in, in which case subtract deposit from purchase price, then x .07.
I always figure that if my deposit is from a line of credit, equity in another property, etc, that I'm figuratively borrowing the whol;e amount.Sorry if this sounds too basic, but my maths skills are basic too, and I would need it spelt out very plainly too!
As v8ghia says, that's for interest only. (Better to make any other repayments on non-investment property as you can claim IP repayments as an expense.)quickchick
Thank you to you all for your responses……this is very helpful. My maths is very basic also but even I can do this. :}
Hey Miccalady, have a look at this calculator (Rental property simulator): http://www.peritus.iinet.net.au
It's spreadsheet based and displays all formulas for you. You really need not do anything apart from plug in your investment criteria.hope it helps
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