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.
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:
Principle and Interest Loan
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.
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.
I look forward to talking to you soon,
The Dwyer Property Investment Team