Hi everyone,
I like to write questions down as I think of them. A question that has come to mind is what the benefit of an interest only loan is if used for the life of the investment?
I usually try to answer my own questions, so please correct me if im wrong
If we borrowed $200,000 over 30 years to buy a IP to rent out, and repayments are $230 per week interest only, we are out laying $358,000 over the 30 years. ($230 x 12months x 30 years = $358,000)
Does this mean the idea is if the property rises in value to say $500,000 over 30 years, we are in front on paper by $142,000 in equity?
These calculations do not include maintenance or other usual costs involved in having an IP.
Do I have the right idea?
I like to write questions down as I think of them. A question that has come to mind is what the benefit of an interest only loan is if used for the life of the investment?
I usually try to answer my own questions, so please correct me if im wrong
If we borrowed $200,000 over 30 years to buy a IP to rent out, and repayments are $230 per week interest only, we are out laying $358,000 over the 30 years. ($230 x 12months x 30 years = $358,000)
Does this mean the idea is if the property rises in value to say $500,000 over 30 years, we are in front on paper by $142,000 in equity?
These calculations do not include maintenance or other usual costs involved in having an IP.
Do I have the right idea?