In the current lending environment, borrowers need to carefully look at whether their interest-only mortgage stacks up.
Lenders have lifted rates for interest only loans and are now offering incentives for principle and interest loans to make them more attractive to borrowers.
While interest on investment properties can be tax deductable, interest only loans make it harder to build equity. So therefore borrowers are heavily reliant on a property’s price to rise to improve their position.
For those currently with interest only loans, they should consider switching to principal and interest repayments to start paying down the loan plus gain a reduced interest rate.
Borrowers not yet ready to switch their interest only loan repayments should at least begin to prepare and budget for future principal & interest repayments.
The decision to switch to principal and interest repayments is an important one for borrowers so please speak to your 1st Street mortgage broker today to discuss your options.