Interest management loans

Cash flow management loans

Cash flow or Capitaliser structured Lines of credit are an alternative to negative gearing, they take your rental income as your mortgage repayment and capitalise any balance owing to the principle. Your loan will increase slightly over time, with both you and the lender banking on the potential of the property for capital growth in order to pay off the loan in full when the property is sold.

Cash flow management loans most suit experienced investors who are after future capital growth without compromising their current lifestyle.

Security for cash flow management loans can be comprised of mixed residential and commercial security at high Loan to Value Ratios (LVR). For loan sizes over $250,000, you can generally access features including features redraw, portability, split accounts, and interest retention.

Interest in advance

Paying interest in advance is the option to pay the interest that will accumulate on your loan over the next year before it is actually charged. This allows you to claim the costs against your tax a year earlier than you would normally be able to. Usually available on fixed rate loans, lenders may offer a discount on the interest rate if you do pay in advance. The loan term may range from one-to-five years, depending on your lender.

Paying interest in advance is only an option for those who are able to afford to pay the loan interest in a lump sum.

Interest only fixed rate home loan

Interest only loans suit investors who are focused on achieving capital growth, and often go hand-in-hand with negative gearing. These types of loans will usually have lower repayments than a principal and interest loan.

A fixed rate interest only home loan usually has a term of one-to-five years, after which you will need to renegotiate your or pay out the loan.

Interest only variable rate home loan

A variable rate interest only home loan works in a very similar manner to a fixed rate loan of the same type, although with variable rate repayments depending on movements by the Reserve Bank and your lender. Unlike variable rate principal and interest loans, an interest only loan may not have many features available (e.g. redraw). After the interest only period expires, usually five years, your loan will revert to a standard principal and interest loan.

For more information on interest management loans

If you would like more information on interest rate management or borrowing for either residential or commercial investment, talk to a mortgage broker about your options. Or call us on 13 LOAN or direct on +61 2 9249 3739.