Interest Only Loans

Hi guys.

Sorry if this is in the wrong section and a bit of a noob question, or has been talked about before (my search function hasnt been working for the past few days).

Ive heard people talk about interest only loans, and how instead of paying off your borrowings, you are only paying off the interest on the loan.

Would these apply to investment properties (if they do even exist)?

The reason this popped into my head, is with investment properties, the aim leans more towards increasing assets, as opposed to decreasing debts when it comes owning your own home.

Is this something people use, or have looked into, as it would make it easier to get neutrally/positively geared products, and enabling more IP buys?

I just see it as id rather have 4 properties, with 1 million in debt where neutral gearing enables me to maintain lifestyle, future investments etc, where in 3 yrs it may be worth 1.4 million, as opposed to owning 2 properties, and due to negative gearing, opportunities for future investments are slimmer.

Thanks for any help clearing this up for me, sorry it its confused some of you haha.

Nick
 
Yes they exist.
They are definitely the way to go for IP and even PPoR, use a 100% offset for saving extra deposits/safetynet or whatever you like.
Should help you with cashflow too.
 
It seems you're catching on ;)

The way I see it is this: If you're paying IO on the loan, and the property rents for as much/ or more than interest repayments are, then its pretty well as if you have paid the property's debt off because it doesn't require any outgoings from you. Just like living in a home that is fully paid out.

If this is the case and your equity is rising, then you can buy (pretty well) as many as these as you like.
The aim of the game is to use other peoples money, and as little of your own as possible.
 
Finally, catching on haha... thanks guys.

Im was at a loss to think how people were getting positively geared IPs, then i started to add things up.

Nick
 
Finally, catching on haha... thanks guys.

Im was at a loss to think how people were getting positively geared IPs, then i started to add things up.

Nick

Im positive gearing on my IP by $230.00 a fortnight and i have a I&P loan, So it can be done either way.
 
Nice work!

ATM, anything im looking at is going to be negatively geared around $125pw including fees, and maybe $70pw with IO. I guess it may be the areas im looking etc.

Thanks Propertunity, will def have a look.
 
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