Why do you recommend an Interest-only Loan?

As the title suggests, an INTEREST ONLY (IO) loan, consists of payments of interest only. It is up to you when you want to reduce the PRINCIPAL. The weekly IO payments are less than their PRINCIPAL and INTEREST (P&I) counterparts.
Most IO loans are fixed for 3 to 5 years. After this period they are automatically converted to P&I loans. At your discretion you may continue on an IO basis.

As the VALUE of your investment property GROWS every year, the VALUE of the principal SHRINKS. For example, a house bought for $8,500 in 1960 is probably worth over $450 000 in 2007. Wouldn’t it make more sense to pay this relatively insignificant principal later rather than earlier?

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