Investment Property

The following are the three main choices for investment property home loans:

01. Standard variable rate or fixed rate home loan

Depending on your financial circumstances, most lenders will let you borrow up to 95% of the purchase price of an investment property. You may, however, be required to take out lenders mortgage insurance.

02. Interest only home loan

An interest-only home loan requires you to pay the interest in installments and repay the principal amount in full at the end of the loan term (usually three to five years). This ensures that the repayments are less since the borrowers only have to repay the interest component instead of the principal plus interest component.

03. Equity home loan

If you already own or substantially own your home, you can borrow against the “equity’ i.e. the difference between what your property is worth and what you owe. For example, if you have $200,000 to pay off on a home worth $500,000, you have $300,000 worth of equity. An equity home loan gives you a line of credit on your mortgage up to an approved amount. The loan can be taken in full or in stages, making it particularly useful for property investing.

Important extras

The following include loan features that may offer tax-benefits or help you pay off your investment loan sooner:

• Interest-in-advance home loan (lets you pay next year’s interest in the current financial year, thus, creating a tax deduction for eligible borrowers)
• Mortgage offset account (lets you use savings and interest earned on savings to pay off the loan principal).

This is where we come in and promise to provide you with invaluable experience. After assessing your financial situation, we will identify areas where you can potentially save money by simplifying loan structures and maximizing the use of assets. Did you know that by using the equity in your home, banks can finance up to 110% of the value of an investment property depending on your home value?

It is important to work through all possible options by carefully considering the advantages and risks associated with each option. It is only after all this that there is a high chance of you getting the full benefits from the loan of your choice.