Investment only loans

[mouchie]

Im very new at property investing. Have recently bought my second property and hope to continue buying property. I have read that property investors often recommend interest only loans> My questions is however, what do most investors do at the end of the interest only loan period. Is it recommended that you then pay principal and interest or sell?

Mouchie

[jbocker]

There is no real right answer Mouchie. You can request the bank to continue interest only payments, may cost a fee though. You can fix the rate at that time too but potentially another fee unless you do both at the same time. No need to sell unless you want to access any capital gain (or cut some losses) - there will be a tax implication on selling though.
The options on continuing after the end of interest only are all yours, but may have afee, so ask when you consider the bank in the first place.

[MelbKate]

As you near the end of the interest-only period, review your overall situation to determine whether rolling over into a new interest-only period is suitable for your then circumstances e.g. positive v negative gearing, the rate of capital growth of the property, etc.

[miraclehomeloans]

Generally you would have it set back to interest only for another 5 or 10 years.There is no pint reducing the debt unless you have paid off your owner occupier first as investment debt is good debt due to the tax benefits.

[davosphere]

Yes Mouchie, either of those options are available.
Other options after the interest-only period is to enter an interest-only mortgage or just pay the principal.
Remember though that by having an interest-only loan you are able to reduce the monthly drain on your monthly cashflow thereby allowing you to better allocate your money to buy new investments or to fund your lifestyle.
Find more information at www.************************/investment-loans/.

[matthewa]

Remember that interest only loans are really meant for the very long term. Most borrowers of interest only loans refinance OR they sell the home before the interest only period ends.

Depends on your strategy really.

[jbocker]

I just thought about my first investment property, It is still on interest only and will be 10 years next May.