End of Financial Year

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It is the end of financial year next month and investors can consider using an investment and taxation strategy known as ‘interest in advance’ in which they pay the next year’s interest on their investment loans in advance. Only those with fixed rate investment loans have the option to pay interest in advance and conditions vary between lenders.

There are several reasons why paying interest in advance can be advantageous for investors. The primary reason is usually to gain tax benefits, e.g. paying the interest that will be accrued in FY2014/2015 in FY2013/2014 and offsetting it against income earned in FY2013/2014, particularly if an investor’s income was unusually high during the financial year or if a lower income is expected in the next financial year. Lenders will often incentivise clients to pay interest in advance by offering them a discount which results in less interest being paid overall. For investors looking to simplify their finances, by paying interest in advance, especially on an interest only loan, they can eliminate the need for periodic payments throughout the year. In terms of budgeting, paying interest in advance means that investors can enjoy a discounted fixed rate for the whole year, regardless of rises or falls in interest rates.

The interest in advance option is available to both new and existing investment loan clients. If you are considering this option it is worthwhile consulting your financial adviser to make sure that it suits your requirements.

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Jeremy Fisher

Director and Founder of 1st Street Home Loans, Jeremy Fisher, is one of the most awarded mortgage brokers in the industry and winner of the Australian Broker Association's prestigious 'Australian Broker of the Year'. Since 2001, Jeremy has settled in excess of $500 million worth of property loans and delighted clients with exceptional results and highly personalised service. 1st Street Home Loans specialises in Home Loans, Commercial Loans, Leasing and Financial Planning. 

1st Street Home Loans is a leader in the industry – awarded No. 1 Mortgage Broker in Australia and ranked No. 1 Elite Business Writer in Australia. We have the knowledge and the relationships to get you the best rate on the market, guaranteed, without charging you any fees. You can be approved for a loan within 48 hours and 1st Street will take care of all of the paperwork and communications with lenders, real estate agents and solicitors.
 

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