Investment loans
An investment loan can be structured as interest-only and interest-in-advance loans. Choosing interest only may be a short-term strategy or a long-term game plan.
Interest-only loans
Interest-only mortgage repayments can be a strategy to free up cash flow as you’re committed to only paying the interest component (i.e. less than a principal and interest amount) or it can be a strategy to maximise the potential tax benefits on an investment property.
A desire to free up your cash flow can be due to a short-term change in lifestyle needs or circumstances, or due to a change in finances overall.
How interest-only repayment work
Loan features/structure
Things to think about
Interest-in-advance loans
Paying interest in advance is prepaying the interest for the year ahead as a lump sum.
When considering any tax advantages, it’s best to seek advice from your accountant/tax professional.
Loan features/structure considerations:
- Must be an investment loan with interest-only, fixed rate.
- Interest in advance as a feature must be locked in at the loan’s start.
- Five years must be left in the contract.
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