Investment Backed Mortgages' Platinum Manager enables investors and owner-occupiers to maintain their cash flow positions during the first five years of the loan by partly funding their interest repayments through equity in the property.
"It's an interest-only variable loan for the first five years currently at 8.15% p.a., and then it converts to an principal and interest loan at the end of the fifth year," explained Derham Stewart, national sales and marketing executive with Investment Backed Mortgages.
During the interest-only period of the loan, interest repayments are on a different rate for each year. For example, the first year you only pay 3.9% interest, second year 5.15%, third year 6.15% and by the fourth year you're paying 7.15% interest. At the end of the fifth year the initial rate reduces by 0.5% to 7.65%.
"The difference in interest repayments are capitalised into the loan so you pay less interest during the first five years," said Stewart.
The loan also allows you to reset the facility once and start the capitalisation rate again at the end of year two. You would also require a new valuation to be done on your property and it must be a maximum 80% LVR.
"Platinum Manager is all about improving your cash flow. A lot of investors buy one or two properties that they're going to rent out, but there will be expenses involved during the first five years. This loan will help them improve their cash flow position by capitalising a portion of their interest repayments," he said.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan