{"id":13501,"date":"2020-12-09T06:00:32","date_gmt":"2020-12-08T19:00:32","guid":{"rendered":"https:\/\/trc-gorod.ru\/?p=13501"},"modified":"2021-03-26T16:56:45","modified_gmt":"2021-03-26T05:56:45","slug":"principle-interest-or-interest-only-which-is-better","status":"publish","type":"post","link":"https:\/\/trc-gorod.ru\/principle-interest-or-interest-only-which-is-better\/","title":{"rendered":"Principle Interest or Interest-Only: Which is better?"},"content":{"rendered":"<p><img decoding=\"async\" class=\"alignnone wp-image-13502 size-full\" src=\"https:\/\/trc-gorod.ru\/wp-content\/uploads\/2020\/11\/Principle-Interest-or-Interest-Only-Which-is-better-1.jpg\" alt=\"Principle Interest or Interest-Only: Which is better? \" width=\"1280\" height=\"754\" srcset=\"https:\/\/trc-gorod.ru\/wp-content\/uploads\/2020\/11\/Principle-Interest-or-Interest-Only-Which-is-better-1.jpg 1280w, https:\/\/trc-gorod.ru\/wp-content\/uploads\/2020\/11\/Principle-Interest-or-Interest-Only-Which-is-better-1-980x577.jpg 980w, https:\/\/trc-gorod.ru\/wp-content\/uploads\/2020\/11\/Principle-Interest-or-Interest-Only-Which-is-better-1-480x283.jpg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1280px, 100vw\" \/><\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: left; padding-bottom: 30px;\"><span style=\"color: #000080;\">It\u2019s the age-old debate.<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Should you structure your property finance as principal interest or interest only?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The reality is, there\u2019s no one size-fits-all, especially when you\u2019re a property investor and your needs are unlikely to be the same as a single-home owner. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In saying that, your finance set-up is critical to get right, and could make a major difference in your long-term ability to create wealth.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s the basics to help get you started.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: left; padding-bottom: 30px;\"><span style=\"color: #000080;\">A Rookie Guide<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, it may sound simple, but there\u2019s nothing wrong with reminding ourselves of exactly what the primary differences are between the two loan types.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Principle Interest<\/span><\/i><span style=\"font-weight: 400;\"> &#8211; You\u2019re paying your principle down, as well as interest, from your first repayment &#8211; meaning you could pay less interest over the life of the loan. Monthly repayments will be higher, but interest rates on this loan structure are usually slightly lower. Only the interest portion of the repayment is tax deductible.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Interest-Only<\/span><\/i><span style=\"font-weight: 400;\"> \u2013 While your minimum monthly repayments will be lower, you could pay more interest over the life of the loan due to not reducing the principle amount. The entire amount you pay is tax deductible.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: left; padding-bottom: 30px;\"><span style=\"color: #000080;\">Getting Comfortable With Well-managed Debt<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As you start to buy investment properties and build a portfolio, the stress of taking on more debt could start to weigh on you.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In your head, an interest-only loan could exacerbate these concerns because you know that you\u2019re not reducing that principle debt sum.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it\u2019s important to remember that you\u2019re playing the long game here for greater future wealth, and some risk can be well calculated and managed.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As you buy properties and start to manage, maintain and possibly even renovate them, an interest-only loan could serve you better for a number of reasons.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lower monthly repayments will give you access to more cash and financial freedom.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another advantage &#8211; every dollar you pay against the loan is a tax deduction.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can also put any available funds into an offset account, meaning if you need that cash it\u2019s readily available to you, whether it be to pay down the loan once the interest-only period has ended, or for something else. With a principle interest loan, once you\u2019ve made a payment, that money is now with the loan provider and to access it you will need to make an application to draw it back.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: left; padding-bottom: 30px;\"><span style=\"color: #000080;\">Pro&#8217;s and Con&#8217;s<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A standout advantage to a principle interest loan is psychological \u2013 you feel better knowing that your debt is going down each and every time you make a repayment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s also a fairly constant proposition. Unlike an interest-only loan where repayments are likely to significantly increase as the interest-only term comes to an end, your principle interest loan repayments are likely to stay very stable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There\u2019s also the comfort that should a crisis occur \u2013 you lose your job or the market significantly drops \u2013 you have much less debt because you\u2019ve been paying down the principle amount.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, while the risk-averse among us might like the idea of paying down our debt as quickly as possible, again we have to remember that property investment is about making educated risks and \u2013 that phrase again \u2013 playing the long game.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Principle interest loans make it much harder to access cash once you\u2019ve made a repayment and don\u2019t give you a tax deduction for the whole amount.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: left; padding-bottom: 30px;\"><span style=\"color: #000080;\">Different Strokes For Different Folks<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When deciding on a loan structure, there is no right or wrong answer. There are many factors to consider based on your overall wealth creation strategy. To help you reverse-engineer a strong plan, talk to a property professional who has been there and can demonstrate success in this field.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Remember, you don\u2019t have to do it alone. Starting out as a property investor can be a long and lonely road, filled with many mistakes and setbacks \u2013 but it doesn\u2019t have to be that way. For a limited time, we\u2019re running a <\/span><b>free property investing seminar<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sign up for free and discover the necessary tools, resources and support that you need to thrive as an investor.\u00a0<\/span><\/p>\n<p><b>Book here &#8211;<\/b><b>\u00a0<span style=\"text-decoration: underline;\"><a href=\"https:\/\/trc-gorod.ru\/pin\/?tfa_46=tfa_5338&amp;tfa_245=PRE+Blog+2020&amp;tfa_5788=Tracked+Response\">Property Investment Seminar<\/a><\/span><\/b><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Jason Whitton<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Founder &#8211; TRC-Gorod\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Should you structure your property finance as principal interest or interest only?\u00a0<\/p>\n<p>The reality is, there\u2019s no one size-fits-all, especially when you\u2019re a property investor and your needs are unlikely to be the same as a single-home owner.<\/p>\n<p>In saying that, your finance set-up is critical to get right, and could make a major difference in your long-term ability to create wealth.\u00a0<\/p>\n<p>Here\u2019s the basics to help get you started.\u00a0<\/p>\n","protected":false},"author":54,"featured_media":13502,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[46,33],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.11 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Principle Interest or Interest-Only: Which is better?<\/title>\n<meta name=\"description\" content=\"Should you structure your property finance as principal interest or interest only?\u00a0The reality is, there\u2019s no one size-fits-all, especially when you\u2019re a property investor and your 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