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From: Mike .


Refinance my P&I loan and buy another property
From: Mark Noonan
Date: 9/11/99
Time: 4:47:18 PM

Hi,

I've currently got one investment property using a P&I loan, which I now have equity of $50,000.00 in. This is what I would like to do, and wonder if it makes sense!

Change the loan to an interest only loan, on my outstanding balance, this should actually give me a positive cash flow from rent-interest alone. Then use the equity to buy another property, and use the positive cash flow to pay for the next property.

Am I going down the right track? I'm renting myself, and this is the only way I can see to finance the next one.

See ya, Mark
 
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EAB

Reply: 1
From: Mike .


Re: Refinance my P&I loan and buy another property
From: EAB
Date: 9/12/99
Time: 11:46:54 AM

Looks good to me, If I had the chance to start again I would never live in a property that I owned to start. We moved to Darlinghurst after living in the Southern suburbs of Sydney for 20 odd years and only now realise we should have done it years ago. My advice is move around a bit while you can and test area's you think you might like to live in 1st. Some people are saying don't fix yet but I have all my loans fixed, one five year started last year @ 6.55% with St George is now being offered at 7.65% so who's to say.

All the best with it though. EAB
 
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Sue1

Reply: 1.1
From: Mike .


Re: Refinance my P&I loan and buy another property
From: Sue
Date: 9/28/99
Time: 12:58:09 PM

Hi Mark, We have all our mortgages on interest only except a very small one on our original home which we now rent out. Interest only makes a huge difference to your repayments. Our last loan was for $107,000 and with P & I the repayments would be over $800 a month. But with Interest only they are less than $600/month. Basically we wouldnt be able to borrow to buy another investment prop if we didn't borrow IO. I asked for a 5 year term, variable interest, so I dont have to worry about rolling it over for a while.

I thought about fixed interest but wasn't game to lock it in, if I want 5 years IO I have to take the 5 year rate which isn't great at the moment. Anyway I can always pop in to the Bank and fix it if I change my mind. Of course it will cost me another $200 to do this..... My plan, as in Jans book, is to buy IO and when we are ready to retire sell off 1 or 2 props to clear the debt. Cheers Sue
 
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