Interest-only loan or a principal & interest (P&I) loan with an all-in-one account?

By

Q: I'm considering buying my first investment property but I've only just started working full-time. I have around $200,000 to spend. This will buy me a small apartment somewhere in the inner city. My question is: would you recommend an interest-only loan or a principal & interest (P&I) loan with an all-in-one account?

A: The answer to your question really depends on what you're trying to achieve. If you're looking to maximise the tax benefits of property investment, you may want to consider taking an interest-only loan, as only the interest portion of your payment is tax deductible. If, however, your long-term goal is to pay down the mortgage in order to 'gear-up' and use the equity to purchase another property, you may want to consider a P&I loan with either a 100% offset account or an all-in-one account. Both of these facilities allow you to have your salary and savings offset the debt, resulting in less interest you have to pay, and thereby will assist in reducing the debt more quickly.

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : narara , freshwater , mt colah , werribee , murdoch

go back

Get help financing your investment



Do you need help finding the right loan for your investment?


When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here