P & I or I/O Borrowings

[orion]

Hi, I was speaking to a bank manager last week and he was saying that the majority of investors they have with loans are using interest only and only a very small number are on P & I.
I have done a poll to see how accurate this, i.e. to see how may are on P & I and how many are on interest only and what is your total percentage borrowings.

Regards
Graeme Fowler

P.S. if you are on revolving credit only for all borrowings, please do anther thread if you like. I am just trying to keep it simple as possible, some investors with revolving credit may be paying loans down quickly, others may not, so it will only confuse things by adding it into this poll, thanks.
Also, some investors are cashed up with no property, so this is not a poll that is for these people either.

[muppet]

yah the first voter.

[exnzpat]

Orion,

My guess is that you will find that Interest Only will be 80 to 100% borrowings.

[exnzpat]

Yes you were Muppet. Now I know that you are 41 -- 60% borrowings.

[muppet]

Actually I misread the poll and it should be below 40%.

[drelly]

I'm about 50% I/O but I pay off chunks of principle every year.

[Glenis]

This should be interesting - I always thought investors were likely to go with a I/O but in these early stages of the poll it's about even. There are a lot of investors here who have been in the biz for a long time that will probably show up in the % of borrowings.

It would be interesting to run another poll on new investors - say last 2 years. Many of these will have been influenced by investment seminars which may sing a different tune to the long time investors.

[orion]

My guess is that you will find that Interest Only will be 80 to 100% borrowings.

That would have been my thoughts too Expat, maybe they are just deciding not to take part at this stage, or are possibly non-members. I think you can only vote if you are joined up as a PT member.

Regards
Graeme Fowler

[princess]

possible too that when you say total borrowings, those of us still paying down our PPOR on P&I might be skewing the results.. That's what we're doing, but IPs are all on int only. As MOST of our borrowings are IO, i gave my answer under IO - there might be more of us with a combination.

[orion]

That's what we're doing, but IPs are all on int only. As MOST of our borrowings are IO, i gave my answer under IO - there might be more of us with a combination.

Thanks Princess,

Can I just ask you please the logic behind I/O on the rentals and whether you would do it again if you were borrowing to buy more rentals?

Regards
Graeme Fowler

[kalovatt]

Bit hard to vote in this poll, as I have 2 on P and I and 1 on IO

[orion]

Bit hard to vote in this poll, as I have 2 on P and I and 1 on IO

Hi Kalovatt, yes is a bit awkward with both i.e. voting. You could say P & I as you have 2 as opposed to one on I/O or you could say whichever one has the highest overall debt, up to you.

Regards
Graeme Fowler

[cube]

Is the percentage an LVR measure, or a % of total borrowings, in which case anyone without 100% of one would have some of the other?

[princess]

Hi Orion...

Yep - logic is simple, we bought one IP with a negative cashflow - a small house on a big section. Subdividing to sell one lot in order to reduce total borrowings. To keep cash outflow to a minimum we went IO for the first year. Lot 2 now on the market... bit later than expected, and timing is not the best :-(

Expect to be able to put initial house on P&I with cash neutral or positive position soon. Borrowing again for more rentals? Not soon! Decision would be based on the numbers. Number one aim is to reduce PPOR mortage.

[orion]

Is the percentage an LVR measure, or a % of total borrowings, in which case anyone without 100% of one would have some of the other?

Hi Cube,

Yes LVR, so for example $500,000 in loans and current market value of $800,000 in property = approx 62% borrowings ($500,000 / $800,000).
Equity in this case is $300,000.

Regards
Graeme Fowler