05 Sep 2016

Keeping your cash flow

Let’s say you’ve got a number of investments, and one in particular’s on interest only, and then you’ve got another one that you’re looking to buy. You have also got your PPR. It’s on a P&I loan and it’s got a small debt on it. You’ve used some of that line of credit as your deposit into each one of those properties. In order to purchase more property you had to go into a P&I loan and you’ve got an interest only loan on that property then. How could you restructure so as to get a bit more cash flow?

For investment loans you are looking at predominantly interest only loans, unless there is a definite need. The other thing you could look at is converting the loan on your principal place of residence (PPR) to an interest only loan, or a line of credit or something like that, again to alleviate cash flow if that’s what the immediate issue is.

When talking about investment loans particularly, it’s about interest only primarily. P&I might be okay on your principal place of residence because you’re really trying to power down and get it down provided that you’ve got the kind of loan that you can put more money into.