It simply means that the prepayment of 12 months of interest on your loan in advance. Therefore, towards the end of the year, for example, before the June 30, 2008 will pay 12 months interest in advance, taking the June 30, 2009. So you have pre-payment of interest coming years and can now claim as deduction the current year. Thus, in July, investors who are eligible to do so may become part of this interest in the form of a tax deduction. You can not do this with any loan you have, when negotiating the loan agreement or requested, we need to ask your agent for a loan interest in advance “. An interest in advance loan is similar to” fixed rate, the interest only home mortgages standard “EXCEPT the interest you pay in advance. Some lenders also offer advance interest, such as the frequency options year, semester, quarterly and monthly – which spread the payments over a period of time.

While the initial investment may seem many investors are simply unaware of the tax and savings strategies given this interest. Paying interest in advance is a form that can be achieved off your lender may also accelerate the tax deductions that come from this expenditure as far as them in the current financial year. Some banks offer around 10-20 basis points discount. In fact last year one of the major banks that provide 30 points off the usual rate loan to fixed investment. As we have already implemented this type of loans do not differ much from the standard fixed-rate interest-only residential mortgage loans “, meaning that the loan is fixed for a certain period of time usually 1 3 5 10 15. At the end of the ‘fixed’, although the period of loan should be repaid in full or renegotiated. This is the case of all loans fixed rate if interest in the progress or not. There will be significant rates of early repayment of the loan for cancellation before a fixed term has expired despite setting the fee for obtaining a degree of certainty in these difficult times.

It is also worth noting that these loans do not have all the features of a standard mortgage. The most important thing to remember is that there is access to funds through drawing. However, it is possible to split your loan – so you get a fully featured loan in one part of your loan. The normal minimum is $ 30,000. Definitely, these loans can be beneficial, but a healthy cash flow and savings plan are strictly necessary to meet interest payments. As always you should consult your accountant or financial professional before making any financial decision as the circumstances are different.