The consensus within the investing community is to purchase properties with IO loans which I believe to have merit and I have done as it was particularly attractive to my situation.
Just wondering though if after the initial 5 years, people renew the loan as IO or let it roll over to P&I.
Obviously this would depend on one's goals and circumstances - I suppose keeping IO would allow more cash flow to continue investing, while going to P&I will let the property pay itself off and remove its own mortgage at the end of the period, which may make it easier to transfer to SMSF if in a unit trust etc.
I assume IO may be best if you want to continue investing, while P&I is good if you have bought your set amount of properties and would like to let them pay themselves off so that in the future you can have $X amount of unencumbered properties bringing in $X amount of passive income.
Would love to hear your opinions on this.
I included a poll, because, well who doesn't love colourful graphs and stuff?
John
Just wondering though if after the initial 5 years, people renew the loan as IO or let it roll over to P&I.
Obviously this would depend on one's goals and circumstances - I suppose keeping IO would allow more cash flow to continue investing, while going to P&I will let the property pay itself off and remove its own mortgage at the end of the period, which may make it easier to transfer to SMSF if in a unit trust etc.
I assume IO may be best if you want to continue investing, while P&I is good if you have bought your set amount of properties and would like to let them pay themselves off so that in the future you can have $X amount of unencumbered properties bringing in $X amount of passive income.
Would love to hear your opinions on this.
I included a poll, because, well who doesn't love colourful graphs and stuff?
John