Interest in Advance loans particularly suit property investors who are eligible for a tax deduction on the interest incurred. What cashed-up investors are effectively doing is bringing forward up to a year’s worth of interest to an earlier financial year so the tax-deduction occurs sooner, perhaps at a different tax rate. Some lenders offer an interest rate discount for this prepayment and allow the investor to budget better as their loan repayment won’t vary.  We stress that borrowers should consult their accountant or financial adviser before choosing any type of investment loan for taxation reasons.

We also suggest people consult their tax adviser before purchasing an investment property or deciding on a loan, to learn whether they are eligible for tax deductions on their investment and whether this type of product suits their tax planning strategies.