If you are thinking about buying your first investment, or want to buy property through your SMSF emoney can help you find the most suitable loan to finance your property.
What features do you need to know about?
Interest Only (IO)
Interest only (IO) loan repayments only cover the interest set for the term of the loan – the principal remains untouched.
Traditionally this has meant lower repayments which can be claimed back as a tax deduction.
However, interest rates on IO loans are higher than principal and interest (P&I) and an IO loan may not be the best choice for you.
Principal & Interest (P&I)
With a P&I loan you start reducing the principal immediately. While your repayments may be higher with a P&I loan, you are paying off the principal and ultimately saving on interest repayment.
Line of Credit
A line of credit loan, gives you access to the equity in your property. You can draw, pay back and redraw the funds as many times as you like for various purposes. It can help you counter any shortfalls in rental payments over the term of your investment as well as give you access to funds to purchase your next property investment. Just remember to keep track of the funds you withdraw so you stay on top of the tax deductibility of your interest repayments.