Hello! I’m new to the forums and have been reading a lot, it has been very helpful so far. Just looking for some advice regarding best strategy for investment home loan in my situation – IO vs P&I, fixed vs variable? I’m looking for 1st IP ~500-600k. I have nil PPOR or non-deductible debt. Rates I’m seeing: 2.3% fixed P&I, 2.5% Fixed IO, 3.1% var. Offset on variable part only. I’m thinking split loan with majority fixed, and the variable component being leftover savings + what I predict I can save in the duration of the fixed component. Unsure of P&I vs IO? There is a 0.2% rate difference which could be excessive (referring to Terry_w’s Loan Tips). However, looks like most of the IP loans I have come across on the forums are IO. If IO, could be additional tax savings, but unsure if this outweighs the extra interest paid in life of loan. The extra cashflow would likely just go into savings/offset account. My plan would be for potentially a 2nd IP in a few years time. Thank you!
Do you own your PPOR or will you buy one some day ? What are your property portfolio goals ? What tax bracket are you on ? How much deposit do you have ? ta rolf
Not enough info to really come to a conclusion, as Rolf has asked above, need to factor those things into your decision. Ideally engage a decent broker who can show you the outcome of P&I Vs IO today and in the future for when you may want to buy another IP, then another etc.
