Australian Mortgage and Loan Information

When I was planning to become a property investor back in the 80’s a wise old man gave me a simple piece of advice. Treat your property investment as a business. If it is a business then the home loan used to finance the business must also be good for business.

To this end my mortgage broker and I agree interest only mortgage loans are the number one type of loan for a property investment in Australia. So why are they number one?

Interest only home loan mortgage.
As the title indicates, an interest only mortgage or home loan means your repayments only have to cover the interest portion of the loan. You do not have to reduce your original home loan principle. After all it is only the interest you pay that is tax deductible, paying off principal just reduces your cash flow. Cash flow is king, as you need it to succeed in any and every business.

Freeing up the principal component for use for other investments is good business acumen. Inflation, demand and supply will take care of the value of your property against the amount of your loan. By lowering the ongoing servicing costs you will keep one step ahead of the principal and interest pack. Most major banks and other major home loan mortgage lenders will allow you to choose an interest only period of up to 10 years, if you can get a longer period of interest only on your investment home loan or mortgage, take it.

Some lenders even let you pay interest only in advance. This will give you significant tax savings in the early years if you have the means.

Interest only home loan mortgage statements are also easier to check for errors. I suggest you still consider some pc based mortgage checking software. Mortgage lenders and banks make mistakes. Recent surveys reveal over 50% of loan statements have errors. Please check your statements.