1. What Are Your Long-Term Plans for the Property?
Are you keeping it as a long-term investment? Or is it a future home for you? If it’s a future residence, reducing the debt now with a principal-and-interest loan might make sense. If it’s staying in your portfolio, interest-only could be the better choice.
2. Are You Building for the Future or Preparing for Retirement?
If retirement is still decades away, preserving cash flow with interest-only loans might help you expand your portfolio. But if you’re closer to retirement, paying down the debt now with a principal-and-interest loan can bring peace of mind.
3. How Does It Fit Your Lifestyle?
Think about where you are in life. Are you growing your family or tackling new expenses? Or are you freeing up money after big commitments like school fees? Your cash flow needs will guide your choice.
4. How Soon Do You Want to Buy Again?
If you’re eager to purchase your next property, building equity faster with a principal-and-interest loan might help. However, if cash flow flexibility is more important, interest-only might be the way to go.
There’s no perfect answer for everyone—your situation is unique, and so is your ideal loan strategy. Sometimes, a mix of both types across your portfolio gives you the best of both worlds: the security of principal-and-interest and the flexibility of interest-only.
The key is to work with someone who understands your dreams and can guide you toward the right decision. A mortgage broker who listens, understands your goals, and helps create a plan that feels right for you is invaluable.
