NSW Sydney..down turn is beginning..2018-2019 will present opportunities..

Yep - goodluck with your move. I say once you settle and get a job if your finances allow it let us know if you end up doing this. I will look into it more once I return from my Brisbane trip at the end of next week.

 

OK just did some rough calculations

Loan = $350k
Rate for I/O = 5.7% (Pepper rate. If you use Libery or others it will be a lot higher).
Rate for P/I = 3.9% (typical rate offered now by many you can get lower actually)
Loan Term = 30 years

Monthly repayment on I/O = $1662.50 per month
Monthly repayment on P/I = $1650.84 per month

Going by these numbers it definitely makes sense. Why wouldn't you reduce your debt instead of feeding the banks.

 

Already requesting P&! for one smaller loan (equity release 1 year ago) as it was the highest rate at 5.54% and repayment at P&I assuming I can have the best rate, will be approx additional $350 a year which is easy.

The other loan I'm contemplating is at 4.99% IO and changing the rate to P&I fixed at best rate will add cost to approx. $3500 a year. If I'm stable with my job this won't be a big issue

 

3m debt on 4m with Interest bill is 144k per annum and expenses on top... joe should not even think about borrowing.

 

wow that is crazy, it just doesn't make sense to go IO in that situation

 

If you were planning on purchasing or upgrading your PPOR in the near future it would make sense to stay IO even if the repayments are higher.
Why? It makes sense to put as much deposit into a non tax deductible purchase and leave the maximum amount owing against your IP loans instead.
It's not just a plain interest rate consideration but also future planning your tax benefits.

 

Doesn't suite all people. First of you gotta be paying tax in the first place. Most wealthy people who make alot of money pay the least amount in tax as you never actually get back all of your tax so its always better to pay nothing in the first place.

Secondly the amount of tax your paying. If your paying little it doesnt make sense to pay more than that in interest. You cant make money from the ATO.

But yes agree after considering the I/O and P/I scenarios you should calculate based on your own personal circumstances.

But either way you would be silly to freely pay interest on your investment when you could be lowering your debt substantially with the same amount being repaid - its better not to pay or avoid paying tax in the first place and taking on the P/I investment loan.

I ran the above basic calculations to numerous lenders now. CBA/Wespac and Aussie. They all agree and advised that many investors are doing this now as it just doesnt make sense if your interest is too high.