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Investment Loans Should Not Compromise Lifestyle

When looking at investing in property, the way a loan is structured can have a big impact on you and your families’ lifestyle. So it’s important to understand the exact figures and family cash flow before progressing to any purchase.

Investment Loans Should Not Compromise Lifestyle

Interest Only (IO) vs Principle and Interest (P&I)

Banks and mortgage brokers will be encouraging you to take a P&I loan as the government and banking regulators want everyone to be paying down their loans. This can be a good idea, but it isn't suitable for all investors.

Every investor I speak to says “we want a cash positive investment”. Now, this is easy to achieve with an IO loan, but almost impossible to achieve with a P&I loan.

Interest Only Loans:

  • Your payments to the lender is the interest on the loan only
  • Your loan amount remains the same and doesn't decrease
  • Interest is a tax-deductible expense
  • Interest rates are generally a bit higher than P&I loans
  • Lenders make it a bit harder to comply in getting an IO loan
  • Interest only loans are only interest only for a short term, usually 1 – 5 years
  • The loan percentage you can borrow from the bank is often lower, many requiring a 20% deposit

Principle and Interest Loan

  • Your payments to the lender is the interest and a component of principle
  • Your loan amount is reducing after every payment is made
  • The interest component only is tax deductible, not the principle amount
  • Interest rates are generally a bit lower than IO loans
  • Compliance in getting a P&I loan with some lenders can be easier

P&I repayments are higher than IO repayments, so some investors may find this amount cost prohibitive – this is where a full financial report is advisable.

A full financial report will show you the exact cash flow figures, which are tailored to you on a specific property. It will take into account not only the loan amount, loan type and interest rate, but it will also work out the property depreciation tax benefits. This will be based on your income along with rental expenses like Rates, Insurance, Maintenance etc.

Before you make any investment decisions you need to understand the figures.
Contact me for a FREE, no obligation investment financial analysis to determine what loan type and structure is going to suit your financial situation.

Schedule your financial health check >

Every investor is different with varied incomes and personal expenditure, therefore, need a loan structure and cash flow tailored specifically to them.

When it comes to investing, one loan and one property certainly doesn't fit all.

If you'd like to know more, please give us a call or visit our website at www.dwyerpropertyinvestments.com.au. Or if you prefer, you can email us by clicking here.

I look forward to talking to you soon,
Kind regards

The Dwyer Property Investment Team

Call us today to discuss how we can help you own an investment property
1800 088 437 or visit www.dwyerpropertyinvestments.com.au

e: [email protected]
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Jason Dwyer

Jason is the Managing Director of Dwyer Property Investments and a trusted local expert. Together with build partner Dwyer Quality Homes, he’s been helping Queenslanders buy profitable, cash-positive, tax-effective investment property for 35 years. Visit dwyerpropertyinvestments.com.au.

FREE: Investor Starter Pack

Our 3-year rental guarantee for risk-free investing, explained
How we select high-yield/high-growth locations to maximise returns
3-step guide to becoming a successful property investor
Why property is one of the best investments
Must-know tips for investing in property (based on 35+ years’ experience)

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