We see far too many clients who are paying the price for not obtaining independent advice when they arranged the finance for their property purchase.
No matter how informed you are or how good a loan might seem, discuss the loan structure & your options with a property lawyer before committing to the loan.
Tip 03 – Pay Off Your Home Loan First?
- Where you have more than one loan – such as a loan for an investment property AND another loan for your home, obtain financial advice as to whether you should pay off the home loan first.
- Australian taxation laws currently allow many taxpayers to claim deductions for expenses (such as interest on loans) for investment properties rented to the public.
- Where a loan secured against your home is used for investment purposes, the loan costs may still be a deductible expense.
Where your advisor recommends paying your home loan first:
- As you want to make the highest possible payments off your home loan, the investment loan payments need to be as low as possible.
- The investment loan should be interest only where the monthly payments only pay the interest and no debt repayments are made.
- The home loan should be principal and interest, with each payment as high as borrowers can afford to reduce the principal debt as quickly as possible.