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question about property finance

Discussion in 'Property Finance' started by igor1234, 15th Oct, 2016.

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  1. igor1234

    igor1234 Member

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    I have a naive question: for a P&I loans - should an investor choose 25 years loan with higher interest or a 30 year loan with a lower one? scenario one you pay 200$ more each month, but overall pay ~ 20K less in interest.

    thoughts?
     
    TaylorChang likes this.
  2. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    What about IO only but put excess money into an offset? That's for maximum flexibility. You never know what you'll do with the property in future or you might decide to quit your job or you might decide to buy a bunch of IPs and need every cent for serviceability or something could happen along those lines....

    If you still rather go P&I go the 30 year term. Don't be forced into paying more than you need too.

    Note: I'm not a broker but i'm sure a good broker will come along and chime in! :)
     
    Perthguy likes this.
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    You never know when that $200/month will come in handy.
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I don't quite understand the question.

    Most investors opt for IO against their investment debt.

    Some will even opt for IO against non investment debt - and park all spare cash in a linked offset.

    Cheers

    Jamie
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    What are you hoping to achieve? If you're hoping ot reduce the amount of interest you pay, get a low rate and pay it off asap.

    It really is as simple as that.

    If you have any other plans to invest or similar, this is not going to be conducive to that if the house is an IP.
     
    TaylorChang likes this.
  6. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Really depends on your goals and specific situation?

    I like to give the bank the minimal amount possible (interest only) and I keep the rest and use it as I see fit, thankyou very much :)
     
    TaylorChang likes this.
  7. TaylorChang

    TaylorChang Well-Known Member

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    As a investor, cashflow is a king. Less cash outflow means you keep more cash on your side.
    why pay more to reduce your debt when you don't necessary to reduce your debt by your own cash. Debt will be gradually diminishing by inflation and asset appreciation.

    20 years ago, Sydney property is only around $300,000. Borrow 80% of 300,000 is $240,000.
    $240,000 loan amount seems big at the time, but now it seems nothing.

    As an investor yourself why in the hurry to pay down the debt ?
     
    Colin Rice likes this.