Is now a good time to buy another investment property - or first rearrange the loan on our home and start paying back capital.

Q.

My wife and I have a combined income of $110,000. We have an investment property valued at $350-400k with $110k loan; our home is worth $1.5m and has a loan of $380k - both of the home loans are interest only. We have three children, no other financial liabilities and wonder if now is a good time to buy another investment property - or first rearrange the loan on our home and start paying back capital. What are your thoughts?

Provided your income is secure, and you are not getting out of your depth, I prefer keeping the investment loans on an interest only basis while focussing on paying off the non deductible home loan. Only you can decide whether buying another investment property is in your best long term interests but I am concerned that your portfolio is entirely invested in residential property and has no exposure to Australian shares. Think about diversifying into quality shares - a major benefit is that you can start small.