Does anyone pay off principal in IPs?
- Thread starter s050399b
- Start date
Sometimes if i have to...
I prefer not to, only if the lender requires me to i will to get the deal across the line.
The market isn't coming down. There is an inherent undersupply of housing here in Oz.
To me, it's all about leverage. I want to control the largest asset base I can with my (input) funds.
As the market moves up, the value of the property I control grows. My debt remains the same, so I get to keep the difference by way of selling or releasing equity through loan top ups or re-financing.
If I own (outright) a $500,000 property and it increases 10%, I make $50,000.
If I control a $2m portfolio (even though I only own 10% or 20% of it) and it increases 10%, then I've made $200,000.
$200,000 is a lot more than $50,000. I can sleep at night just fine
To me, it's all about leverage. I want to control the largest asset base I can with my (input) funds.
As the market moves up, the value of the property I control grows. My debt remains the same, so I get to keep the difference by way of selling or releasing equity through loan top ups or re-financing.
If I own (outright) a $500,000 property and it increases 10%, I make $50,000.
If I control a $2m portfolio (even though I only own 10% or 20% of it) and it increases 10%, then I've made $200,000.
$200,000 is a lot more than $50,000. I can sleep at night just fine
get the best of both worlds
get an 100% IO offset account and pile your principal cash into that.
More flexible and just as effective for accumulation.
ta
rolf
get an 100% IO offset account and pile your principal cash into that.
More flexible and just as effective for accumulation.
ta
rolf
I'm sorry if I am not up to date on your other Threads, but have you an Offset Account or a Redraw Facility?
If your loan is IO and you would still like to pay everything you can to keep this loan down, then use these facilities. If it is your choice to reduce your IP Loan rather than the banks......you will have more flexibility if your cashflow becomes restricted.
Regards JO
I've swapped houses over so the house that will be an IP is P&I and the house we are living in is IO and the fees are too high to make it worth changing. Just means the payments on the soon-to-be-IP are half interest, half payments.
I wonder if I can depreciate anything to make up for it ...
I wonder if I can depreciate anything to make up for it ...
The bulk of my loans are IO, however I do have one loan that is P&I.
I personally like the idea of reducing debt over a looonnng period of time.
Each to their own I suppose. I hardly ever see many investors recommending P&I loans, maybe I just like to be different.
If I had any non-deductable debt (I don't), I would be attacking that loan first.
Regards
Marty
I personally like the idea of reducing debt over a looonnng period of time.
Each to their own I suppose. I hardly ever see many investors recommending P&I loans, maybe I just like to be different.
If I had any non-deductable debt (I don't), I would be attacking that loan first.
Regards
Marty
Another interest only here too..
three of our IP loans are IO, one is P&I.
The P&I one is on a pair of retirement units, which although positive cashflow, don't have the same capital growth as the normal houses we have.
Paying them down means we get equity a bit quicker, and they pay for themselves even with the principal component.
Oh and our PPOR is P&I also.
ps had to re register as I lost my password and have a new email address.
The P&I one is on a pair of retirement units, which although positive cashflow, don't have the same capital growth as the normal houses we have.
Paying them down means we get equity a bit quicker, and they pay for themselves even with the principal component.
Oh and our PPOR is P&I also.
ps had to re register as I lost my password and have a new email address.
But you'd be better off parking those funds in an offset. If you need to access the funds again for private purposes, you lose deductibility if you've paid down the loan. When talking about $20K, not a big deal, but if the numbers get big and you want to buy a bigger PPOR (for example), it can hurt.
Show off!we are paying them off now but we don't have any personal (non-deductable) debt and nothing better to do with our cash at the moment.