Financing your shop house.
When buying properties from investment purpose, take as much loan as possible (of course you only take as much as you can comfortably to pay back).Why?
First, property used as a rental (you can rent out the ground floor & convert the upper floors to BH) are eligible for tax deduction for interest portion. This is a significant deduction as the interest portion of the mortgage is extremely high during the early years (about 90% of the payment).
Second reason is tat by taking loan, you are freeing your capital. This allow you to use your free capital for converting or buy more properties. This is how rich people build wealth by using other people money.
Basically, we are limited by 2 things when come to applying for loan: our cash in hand(down payment) & our income. First limitation -Down payment (please refer to - part 1 for suggestion). Second limitation - our income. Banks normally limit the mortgage to 33% of our monthly salary.
To be continue...
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