I currently own an investment property which I bought to live in (lived in for couple of years) and now has rented out as I moved (renting) in a better area for kids school.
I am comfortably managing to pay P&I on my current investment loan and trying to save as much for 20% deposit to buy home for living in( say in next 3 years). My question is: Should I switch to interest only loan for the duration i am saving deposit to buy my home? or should I continue P&I investment loan so that I will have equity, less debt (which will allow to comfortably borrow for the next home), breaking down the numbers gets to below scenario:
P&I: will be paying $300 out of MY pocket (rest will be from rental income) each month + 5K yearly for management/council etc. expenses. So total spending around 9K each year.
Interest only: saving $400 each month(difference between IO monthly repayment and the rental income I receive) + 5K yearly for management/council etc. expenses.
Will be receiving tax deduction on loan interest and all other expenses.
Any advise will be appreciated, this is to weight all options before I speak to financial adviser so that i know what advise I am getting/pros and cons.
I am typically a conservative old school who always want to have less debt, also geography is Australia (for the context).Currently i own 25% of the home.