For those borrowers looking at starting or extending an investment property portfolio, or for refinancers looking to switch to a more competitive loan, Easy Street offers its Interest Only Loan.
This loan allows customers to limit their repayments by paying only the interest portion of their home loan for up to five years. You don’t repay any principal leaving repayments less than they would be on a principal and interest loan. You can also prepay interest, allowing you to bring forward tax deductions.
Another bonus is that investors pay the same interest rate as owner occupiers. And you can combine this loan with any Easy Street home loan product and take advantage of a 100 per cent offset account.
Borrowers can repay additional funds onto the loan, helping to cut interest costs and reduce the loan term. As a bonus there is a free redraw facility.
You can get this loan with just a five per cent deposit, and if you hold equity in another home, Easy Street Financial Service offers you the chance to reduce the required deposit even further. But you’ll need to pay lenders mortgage insurance where you borrow more than 80 per cent of the value of the property.
Investors or refinancers looking for a comparable interest rate may find this loan tempting and owner- occupiers may also apply. The ability to free up cash for other purposes could be a drawcard for many borrowers, including new home investors while refinancers might just want a loan that helps them make minimal loan repayments.
While this loan can help you get into the property market sooner, borrowers need to understand the principal amount still exists and it must be paid off at the end of the loan. Interest costs can accumulate and are higher than they would be on a principal and interest loan. But if you’re not bothered by having a large principal repayment waiting for you, and our confident of a capital gain on your property, then this type of loan may appeal. It does pay, however, to be really dedicated and pay off as much as you can as quickly as you can to keep interest costs down.
For the investor looking to minimise tax and free up cash flow, the Easy Street Financial Services Interest Only Loan may offer the right solution.