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Get The Most Out Of Your Investments By Using Interest Only Loans

“A corporation’s primary goal is to make money. Government’s primary role is to take a big chunk of that money and give it to others.” -Larry Ellison

Due to the rapid rise in house prices and the booming real estate market interest only loans are extremely popular and quite useful. This type of loan differs from a traditional loan. This is because each payment made to a traditional loan pays down both principal and interest.

However, in an interest only loan, the payment is just for the interest. For a loan of $20,000 dollars, you would have to pay, at prime rate, only $71 dollars a month.

Interest only loans are a great way to finance investments. Place your money in a high yield money market account, mutual fund, or even in the stock market you will earn enough profit to pay back the interest, the loan, and still have plenty left over for your own pocket.

All investments carry risk, and if you are interested in investing make sure you contact a financial advisor to help you on your way to create a financial plan which will help establish your financial freedom.

There are basically three ways which are most common and more lucrative ways in which to use your interest only loan. Remember none of these guarantee profit and all your financial decisions should be based on solid research.

Endowment Policies. This is probably the most common type of investment to be used in combination with interest only loans. Your money is invested directly in the stock market. Endowment policies usually pay rewards annually and then at the end of the term length you receive a single check for the rest of the money. In addition, Endowment policies have a built in life insurance policy which is great for your family and their economic future ISAs & PEPs.

Individual savings accounts have now replaced what used to be called personal equity plans. ISAs are investments with that offer the investors tax benefits. Money placed in a ISA is not subject to income or capital gains tax. Most ISAs are composed of a variety of options including cash, stocks, shares, and insurance. As of right now, there are limits of how much money you can place into an ISA however shortly those restrictions will be gone.

Pensions. Pensions are a great place to get money to pay down the money owed on your mortgage at the end of the term. Term length is usually around 40 years. Using your retirement money to pay off your mortgage may not be a good idea especially if you have no other means of income or investments after retirement.

Investment Property Portfolio’s – 6 Key Strategies For A Smart Loan

A booming market for buy-to-let and investment property portfolios has created the need for new types of mortgages and investment property loan facilities. Securing finance for buy to let and holiday rental properties classed as an “investment property loan”, has never been easier and many of the main lenders have transformed their lending criteria to support property entrepreneurs.

Historically lenders were reluctant to support property investors unless they had serious investment equity ranging from 25-40% of a given properties value. The latest range of financial offerings, are now more in-line with existing household mortgages where buy to let loans are available for up to 90% of the value of the property. The criteria for lending, depends very much on the anticipated yields for the property and to some degree on solid business plans and logic that reflect capital growth in the investment. With a myriad of product offerings available it maybe difficult for a prospective property investor to determine what constitutes a good offer from a financial institution.

The best investment property lenders will look and consider 6 key elements in their risk assessment. So it is very important that you as the proposer understand clearly and prepare in advance a plan that accurately presents your facts in order to pitch smartly to get the finance you need.

6 key Investment Property Loan points

Equity available – Know what you have in terms of tangible equity in your home, other investments in assets, and liquidity. Use this valuable information to form the basis of calculating your security to finance the investment plan. This ensures to the lender that you have a sound knowledge of your strategy in investing and you have a good consideration in managing your risk.

Interest Rate Percentages – It is generally anticipated that the higher the investment deposit the better the mortgage rate. Buy-to-let mortgages rarely attract the discounts that home mortgages attain. However interest rate benefits are gained if you are prepared to put up front 20 – 25% of the loan value. Try and avoid low deposits as the rates for larger deposits will be more attractive both in the short-term overhead reduction and long-term gain.

Current debts – Ideally all outstanding mortgage and loan liabilities or commitments should be understood and declared when requesting the finance. This will determine the maximum loan available to you for your investment project. Ideally this should be considered in advance of any property speculation or viewing of proposed properties. You may also find through this process that it presents an excellent opportunity to consolidate current finance and reduce overheads through the consolidation process.

Current Income or Salary – Lenders will often consider salary and income within the mix of calculating repayments. Multiples of salary are often considered along with the yields or estimated monthly rental incomes from the property portfolio. Important to the property investment will be the current state of the property and whether the property requires investment in refurbishment or modification to enable tenants or renters to occupy.

Tax liability Reduction – You can often save money by offsetting your mortgage payments, maintenance costs and agents fees against rental income. This will ultimately reduce tax liabilities against any profits made in rental and capital growth.

Insure properly – Accidental damage caused by renters or tenants does occur as does general wear and tear. So, make sure that you invest in adequate insurance and don’t let these costly overheads affect your profits. There are specialized landlord and investment property insurers who will cover your property for these eventualities and once again these fees should be tax-deductable.


Investing in a property portfolio can be a lucrative venture provided that you are prepared and you understand and manage your risks. Lenders will look for good credible knowledge of the investment and will make assessments based on the six points raised earlier. An ill-conceived plan and approach will unlikely attract the finance desired from leading financial institutions. Alternative sources of finance may be available to you, although you should expect to pay significantly higher costs in terms of interest payments set-up fees and management costs. If the numbers don’t add up in the plan the leading lenders will not support your venture. If this is the case then veer towards prudence and carefully rethink the 6 key steps to a smart loan.