How many people have an actual plan to pay down principal by xxx year

[Shaneelastic]

As the heading suggest, do you good investors have an actual plan to pay the debt off by a certain age/year etc,

Through my reading It wouls seem some are relying on either a LOe model, or sell one to pay the rest off??

Would liek to hear throughts on this

 

[kathryn d]

Our properties are all P&I.
Some are already paid for.
The mortgages expire at different times, but
The last mortgage is paid off in 2032

 

[Shaneelastic]

Our properties are all P&I.
Some are already paid for.
The mortgages expire at different times, but
The last mortgage is paid off in 2032

good work on the P & I

 

[Ace in the Hole]

No scheduled plans, as plans change all the time.
Just doing it though, all spare money is topping off offset accounts, one IP at a time.

 

[pieman]

good work on the P & I

Not sure on that, little difference in the early years paying P+I from and amount perspective but you end up tying up more of your money. Much prefer to pay IO and setup TD's and offsets against any debt, preferably non-deductible if you have any firstly and then offset against deductible debt.
This allows you full access to cash when you need it.
You don't get this flexibility when you are unnecessarily paying P+I off a fully deductible loan

 

[Shaneelastic]

Not sure on that, little difference in the early years paying P+I from and amount perspective but you end up tying up more of your money. Much prefer to pay IO and setup TD's and offsets against any debt, preferably non-deductible if you have any firstly and then offset against deductible debt.
This allows you full access to cash when you need it.
You don't get this flexibility when you are unnecessarily paying P+I off a fully deductible loan

surely there comes a time when debt is no longer required, especially in retirement?

Also - Agree with the offset whilst accumulating, but not the TD suggestion

 

[Aaron_C]

surely there comes a time when debt is no longer required, especially in retirement?

Also - Agree with the offset whilst accumulating, but not the TD suggestion

Some people hate debt in retirement, some don't mind it. The only problem is in retirement it becomes a bit harder to get finance due to NCCP.

 

[Alex P Keaton]

I dont plan to pay down any principle until I retire. I'll save a bit of money though into my offset accounts as I go along. On my salary I dont have the means to keep investing and on top of that to pay p & i!

 

[Shaneelastic]

I dont plan to pay down any principle until I retire. I'll save a bit of money though into my offset accounts as I go along. On my salary I dont have the means to keep investing and on top of that to pay p & i!

how will you pay off at retirement??

 

[jingo]

Interesting thread. Different from a few years go when paying down debt wasn't mentioned much, if at all.

I have a couple of loans on P&I. A couple of my other loans are on interest only, with offset accounts attached. The offset accounts are full, which means that a couple of the IP's are effectively paid off. (Or, to be more precise, payments are zero on these loans. ). As the two offset accounts I currently have are full, I have established a TD in the interim while I wait for a fixed loan to mature in November, and then I will establish another offset account to dump the cash into.

I am looking at setting up a SMSF and buying a resi as part of it with a low LVR. The idea is to keep this property until I have access to the funds (ie in 20 yrs or so) and then sell it to pay down the debt on the rest of the portfolio.

I would imagine that as the other loans come off fixed rates, I will establish offset accounts against them to pay down debt.



Regards Jason.

 

[The Y-man]

Not sure about the year of XXX Sounds a bit......


Anyway, wasn't planning as such, but did it anyway after the GFC thing. All properties now paid off..... doesn't mean we're loan free though - like some others, have some trees and capital protected products still lingering...

The Y-man

 

[Perth Investor]

No point paying off principle if you are still accumulating. You could have a loan on P and I, pay $20K off during the year, then go buy another house and the debt goes up by $500K. Makes the $20K look quite small in comparison.

Just throw the money in an offset account, and pay $480K for the next house instead of $500K...

It is only if you have personal debt that you want to be paying principle. Even then the above still happens, it is just the $20K reduces personal debt, and the whole new loan is investment.

If you are not accumulating, then start reducing debt anywhere you can, although Like Jingo says, best way to do it is leave the loans open and put the money in offset accounts, best of both worlds.

 

[Dazz]

If you don't sell 1 or more of your properties, it's a very tough gig.

Over the past year, we just poured all of our cashflow horsepower into the smallest of our loans to eliminate it completely. It's a big ask.

It leaves that valuable free cashflow completely deflated, and the accomplishment of eliminating such a tiny loan compared to the others almost makes it depressing to realise how long it's going to take to "pay down the lot".

Selling a property or three to eliminate debt is almost a given I would of thought....and hence the CGT issue raises its ugly head.

These people that buy multiple houses or units with returns of 20 or 30 or $40 per week positive cashflow are completely deluded if they think they are going to make headway in reducing their debt.

 

[Alex P Keaton]

how will you pay off at retirement??

Sell a few & pay down the debt on the others