Landlord Series 08 – P&I vs IO
Hi, Brian and David here from Bugwash Property. David, question for you mate, I’m a landlord, I have a mortgage on my property, should that loan be interest and principle or interest only?
Good question, Brian. I like this question. For landlords out there, that are happy, that their goal is to only have, you know, one or two, or maybe three investment properties in their lifetime, they’re happy with that. In my opinion, you’re better off going, principle and interest because the goal then is to try own it as soon as possible, and pay down the end of debt, as soon as possible. But if you’re the sort of person, like myself, where you wanna large property portfolio, cashflow becomes more important, so you’re better off going interest only. Remembering that the interest component of an investment loan is a hundred percent tax deductible, the principle component is zero percent tax deductible. So if your goal is to have a larger portfolio, you might wanna consider interest only, better on your cashflow, more tax deductions. But if you’re happy with a smaller portfolio, you might want to consider P & I for the reasons that I went through before. Thanks guys.