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intrest only?

Discussion in 'Property Finance' started by benjamin, 20th Jun, 2016.

  1. benjamin

    benjamin New Member

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    5th Jun, 2016
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    Location:
    QLD
    do most people go intrest only for ip's?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Adelaide, SA
    Yep, makes it easier to hold onto multiple properties.
     
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  3. Redom

    Redom Mortgage Broker Business Member

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    Location:
    Sydney (West) and Canberra
    Yes, i haven't got a breakdown of the actual numbers, but certainly for most loans that i see and write.

    Why:
    • In the main, when you have owner occupier debt, it makes sense to have any investment debt set at interest only and direct any additional repayments to the owner occupier debt. Essentially the investment debt expense is subsidised by the taxpayer, while the owner occupier debt isn't.
    • As part of a structured and diversified lending plan, going interest only on your repayment terms will actually stretch out your overall borrowing capacity. Indeed with most lenders it will reduce your individual lending capacity with that lender, but when looking at the overall portfolio and how aggressive lender calculators work (later in the portfolio accumulation stage) - going interest only is important to benefit from those aggressive calculators.
    • Additional cash flow can be used to generate future deposits.
    • Better to have additional funds in your control and access to it, rather than having to ask for future equity releases if possible.
    Why/when to go P/I:
    • Those that don't have owner occupier debt and want to clear their investment debt. Usually people at the latter consolidation phases and retirement planning strategies involve paying down debt.
    • Cheaper rates with some lenders.
    • Access to better offers with some lenders (e.g. 85% no LMI with Pepper).
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Usually yes.

    You do have an owner occ loan or other non deductible debt?

    Cheers

    Jamie
     
  5. MM16

    MM16 New Member

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    17th Jun, 2016
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    Location:
    Sydney
    Hi all
    If I've applied and been accepted for a principal and interest loan already.... Roughly couple of months ago. Am i able to change it to an interest only loan? Or would that be a hassle
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Canberra and Sydney
    Has the loan settled?

    If so - it depends on the bank. Some will do it via a phone call/form. Others will require a new application.

    If it hasn't settled - the application would need to be reworked, reapproved and new docs issued.

    Cheers

    Jamie
     
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