INVESTMENT LOANS with MELBOURNE MORTGAGE FINANCE

Again, this is a matter of personal choice. Some investors like to reduce the debt and aim at eventually repaying the loan fully. In this case, a “principal & interest” loan might be appropriate. Remember, however, that the “principal” component of your monthly repayment is not tax-deductible.

Other investors are purely tax-driven and only want to pay what is tax-deductible. For these borrowers, an “interest only” loan is more appealing even thought the loan balance is not reducing. If your income is tight, this structure may also be beneficial as it reduces your monthly payments.

Lenders will generally allow you to split your loan into separate parts, so having both structures is possible.