Stage 3 of 7
Interest-only, P&I, and other investor loan structures
Property Investor
Stage 3 / 7 · Loan structure
Interest-only, P&I, and other investor loan structures
Interest-only vs principal-and-interest, whose name is on the title, debt recycling, and the cross-collateralisation trap. Get it right at the start; restructuring later costs real money.
Two investors, identical properties, different loan structure. One is $11,000/yr better off.
IO vs P&I for investors
IO maximises tax deductibility on the investment loan and channels every spare dollar into your owner-occupier offset. The cost: paying interest forever, then a step-up at IO expiry.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.