Best Loan Structure to Pay Down ASAP

[azzae89]

Hi guys,

I'm looking to buy a PPOR in the next few months and my max budget is about 270K.

Looking at P+I repayments for some loans and they still leave me with about $800 per week of disposable income.

Considering I'd like to pay down my mortgage as soon as I can, what loan structure would best help me reduce interest repayments and the term of the loan? Basically, how best can I utilise this $800 p/w left over to my advantage?

I'm looking for specifics such as loan term, principal + interest or interest only, 100% offset?, extra/lump sum repayments, fixed or variable, which lender etc etc...

Thanks!

 

[Terry_w]

Basically the only way to pay down a loan quickly is to make repayments - as much and as quickly as possible. Getting the lowest rate possible also helps.

Add to this a 100% offset account and a 55 days interest free credit card for purchases will mean you can squeeze much more out of it.

 

[Rolf Latham]

Considering I'd like to pay down my mortgage as soon as I can,

lets back the runaway truck up a little .................

Why ?

and

whats your intention with this place in say 5 or 10 years time?
t
arolf

 

[Aaron_C]

The best way to pay down a loan is simply to make repayments....other tricks like paying repayments fortnightly rather than monthly can shave 7 years off a 30 year mortgage.

More important question is though - why do you want to pay it off like this?

 

[Shahin_Afarin]

There is no right or wrong answer without knowing what your long term IP strategy is. That will dictate how to set up your PPOR loan.

Regards

Shahin

 

[azzae89]

lets back the runaway truck up a little .................

Why ?

and

whats your intention with this place in say 5 or 10 years time?
t
arolf

Well wouldn't extra repayments drastically reduce the amount of interest I pay, and also shave years off the term of the loan?

The quicker I build equity in it too, the quicker I can use that equity to fund IP's. Or am I wrong in saying that?

Basically, I'm left over with quite a bit of disposable income every week, and would like to best know where to put it. Offset account? Extra repayments?

I plan to sell this property in say 7 - 10 years time - not for any significant capital gain, but probably because in my early 30's i'll want an upgrade from a small one bedder.

 

[Rolf Latham]

Well wouldn't extra repayments drastically reduce the amount of interest I pay, and also shave years off the term of the loan?

The quicker I build equity in it too, the quicker I can use that equity to fund IP's. Or am I wrong in saying that?

Basically, I'm left over with quite a bit of disposable income every week, and would like to best know where to put it. Offset account? Extra repayments?

I plan to sell this property in say 7 - 10 years time - not for any significant capital gain, but probably because in my early 30's i'll want an upgrade from a small one bedder.

IO with offset gives you more flex...............

Even though u may be looking at selling the property whn upgrading, various circumstances might make that unfavourable at the time

ta
rolf

 

[azzae89]

IO with offset gives you more flex...............

I thought interest only wasn't the best option for a PPOR - as you essentially pay little (if any) of the principal off and it's essentially "just like renting" from the bank?

I may be wrong here, but wouldn't a principal+interest standard variable be more suitable for a PPOR?

Thanks for your help.

 

[Rolf Latham]

If you pay the extra repayments into the offset account, you will pay EXACTLY the same amount of interest as with PI and paying the extra into the loan


ta
rolf

 

[Shahin_Afarin]

IO is a type of strategy - its not for everyone and if used properly in the right way it can be fantastic. If used incorrectly then it will set you back.

Regards

Shahin