I've never understood IO loans. What's the point? You get a loan with no intentions of paying it back and keep your fingers crossed that inflation will pay it off for you? Buy an IP on interest only because you can't afford to pay down the loan, negative gear it because it's such a good investment that the returns are less than the running costs, build some equity thanks to tax payer handouts pushing the market beyond it's natural growth rate and then use that paper gain to borrow more on IO to buy another house that costs more to run than it's returning. Talk about admitting defeat beore you leave the starting blocks! I've seen some property investors do very well but the successful ones I know pay down as much as they can and are very conservative with their borrowings. This interest only, equity mate, I pay too much tax so I have to negative gear mentality is a real concern. In an artificially inflated market you need a lot of luck for that stratergy to work out and only a small bump in the road to lose the lot.
