Forums / Property Investing / Help Needed! / Advice on Monthly P+I Payments (or Should I Go Back to I.O.)?

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  • Profile photo of gatsbygatsby
    Member
    @gatsby
    Join Date: 2003
    Post Count: 708

    I just wanted to put this to the good folk on here.I've always held my two investment properties loans as variable interest only. About ten months ago I changed them both to variable P+I (paid weekly) with the interest coming out of the redraw on each property. It appears though that I'm hardly getting anywhere in reducing the debt? I've been paying an extra $1k-$2k extra a month on my repayments to try and cut down the debt. 
    My question though comes from what a property investing friend told me. He informed me that for the first 7 seven years (roughly) you are only really just paying interest before any principle reduction begins to kick in. Therefore, he told me that I am better off going back to holding both properties as IO again and to continue paying any extra 'myself' on top to reduce the balance? Does this sound like a quicker way to reduce the balance or should I just be patient? My main goal is 'debt reduction' on these two investment properties. I watch how the balance goes down each week (plus what I add on top) then that once a month interest fee on each just seems to gobble up my extra repayments? Many thanks in advance! :-)
    Cheers,
    Gats!

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,065

    Hi Gats

    If your main objective is to pay off both debts asap then keep them as P&I.

    If you have any non-deductible debt (PPOR loan, car loan, credit card, etc) then best to pay of this debt before paying down the IP debt.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of gatsbygatsby
    Member
    @gatsby
    Join Date: 2003
    Post Count: 708

    Thanks for your advice and for replying Jamie. :-)
    Cheers,
    Gats!

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