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Just the Interest thanks
Interest-only loans can be the perfect solution for
investors looking to maximise cash flow while
boosting the tax efficiency of their investment
property .
Paying nothing but interest on a loan might sound like madness, but it's the preferred product for most investors. The property market is currently offering strong returns across the country so it's well worth taking a closer look at your options if you're considering breaking into property investment.
The average Australian house price grew by around ten per cent in 2007, Residex data shows. And some markets achieved much higher growth - Brisbane property values for instance grew by 18 per cent while Melbourne's by as much as 21 per cent! Additionally, rising rental yields are also making property a smart investment choice with tight rental markets sending rental prices through the roof.
This combination of long-term capital growth and regular rental income is what makes property such an ideal investment choice right now. And with an interest-only loan, would-be investors can easily capitalise on these market conditions.
Why choose interest-only?
The most obvious benefit of an interest-only loan is the reduction it gives borrowers on monthly payments. By only paying interest, servicing costs can be cut by at least 10-15 per cent.
Who is it best suited to?
Interest-only loans are suitable for both young and old investors alike. If you own your own home you may be able to use the equity that you've built up to secure an investment loan.
On the other hand, for younger investors, interest-only loans represent an opportunity to minimise monthly repayments - helping you get into the market for significantly less. Because you only need to pay the interest on a mortgage - rather than also chipping away at the principal component - means your loan shouldn't impact as much on your lifestyle, yet you should still see your investment appreciate over time.
But remember...
If the property market falls, paying interest only could leave you without any profit. If you understand the property market you intend to buy in, you can however, help maximise the benefits offered by an interest-only mortgage. Make sure you also speak to your accountant for advice.
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Did You Know?
We can help with Interest Only loans.
Contact Lending Hand Finance on
1300 850 545 or
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