lindstrom
2009-09-20 10:13:15
- #1
Hello,
my partner and I intend to build a holiday home on the coast shortly, which will be rented out completely. We have already found a plot of land and will buy it next week. For this, we will initially use a variable loan until the house planning is finalized and we can arrange the "large" financing, with which we will also repay the variable loan. So far, so good:
We have also already received quite attractive conditions for an annuity loan (without equity - 10 year term) and now a friend has made me aware that a bullet loan might be cheaper, since we can deduct the consistently high interest at the end of the year and at the same time invest the money intended for repayment at the end. If the return were in the range of 6%, one would save money despite the much higher interest on the loan.
Allegedly, many landlords choose this approach and thereby artificially keep interest rates high to claim them for tax purposes.
I know it is difficult without the exact circumstances, but can general statements be made in comparison of these two types of loans about how sensible such a bullet loan is?
Thank you in advance.
my partner and I intend to build a holiday home on the coast shortly, which will be rented out completely. We have already found a plot of land and will buy it next week. For this, we will initially use a variable loan until the house planning is finalized and we can arrange the "large" financing, with which we will also repay the variable loan. So far, so good:
We have also already received quite attractive conditions for an annuity loan (without equity - 10 year term) and now a friend has made me aware that a bullet loan might be cheaper, since we can deduct the consistently high interest at the end of the year and at the same time invest the money intended for repayment at the end. If the return were in the range of 6%, one would save money despite the much higher interest on the loan.
Allegedly, many landlords choose this approach and thereby artificially keep interest rates high to claim them for tax purposes.
I know it is difficult without the exact circumstances, but can general statements be made in comparison of these two types of loans about how sensible such a bullet loan is?
Thank you in advance.