The 2 situations we’ve got are:
Link between the Scenarios
The essential difference between the 2 scenarios is significant. At the conclusion of the 30 year- duration:
In situation # 1 you will have one freehold property worth simply over $2 million (using 5% compounding growth each year).
It is the same period, because of the same-priced homes, but Scanario#2 produces 227percent of this wealth of Scenario # 1.
One reason some investors shy far from interest-only loans may be the concern about increased repayments in the event that period that is interest-only at the finish of 5-10 years. This will suggest the investor would have to spend from the principal in 20-25 years and face higher re re payments.