ARE WEEKLY OR MONTHLY MORTGAGE REPAYMENTS BETTER?
When it comes to paying mortgage interest, should you make repayments monthly or weekly? Nathan says, if you are paying interest only, it is better to do so on a monthly basis.
THE BENEFITS OF PAYING INTEREST ONLY
Nathan prefers to pay interest only for the first five years of his loans. He does this in order to improve his weekly cash flow and serviceability.
By the time the loan reverts to principle and interest repayments, the rental income of the property has increased. Nathan can then begin paying down mortgage debt without sacrificing cash flow.
WEEKLY, FORTNIGHTLY OR MONTHLY?
If making interest only repayments, Nathan says it is better to do so on a monthly basis. Unlike with principal and interest loans, there is no advantage to paying more frequently.
HOW SHOULD YOU ORGANIZE PAYMENT?
When Nathan started out as an investor, he set up different bank accounts for rent and mortgage repayments, however, this soon became cumbersome – the more properties he accumulated, the more bank accounts he had to keep track of.
Nowadays, says Nathan, he sets up a bank account with whichever lender has provided the mortgage. He arranges for rent and mortgage repayments to be deposited and deducted from this one account. This has simplified the whole process and reduced the number of bank accounts Nathan needs to keep track of.
How have you set up mortgage repayments? Does this system work well for you or is it causing too many headaches? Please share your experiences in the comments section below.