One of the key decisions you’ll face is whether to opt for an interest-only loan or a principal and interest loan. Each has its own advantages, depending on your financial goals and investment strategy.
If you choose an interest-only loan, you only pay the interest on the loan for a set period before repayments revert to include the principal amount as well. This results in lower monthly repayments for that set period, which can free up cash flow.
Many investors use this structure to reduce their expenses while still capitalising on tax-deductible interest payments, often redirecting the savings into other investments.
By contrast, principal and interest loans involve repaying both the loan amount and interest from the beginning. While repayments are higher, you build equity faster and reduce the overall interest paid across the life of the loan.
Which loan type is right for you comes down to your financial situation and long-term strategy. Interest-only loans can improve cash flow and support a growth-focused strategy, while principal and interest loans can suit those looking for long-term financial security and reduced debt.
If you would like to assess which loan structure aligns with your goals, we can help. Click here to discuss options with one of our experienced mortgage brokers.