Investment Loans

Investing in property has always been a key component in the Aussie retirement plan. As mortgage brokers, we’re here to shed light on the basics of investment loans and how they can serve as a tool for your property investment strategy.

Key Features of Investment Loans

• Interest Rates: Investment loans may carry higher interest rates than owner-occupier home loans, reflecting the greater risk perceived by lenders.
• Loan-to-Value Ratio (LVR): The LVR is the amount you are borrowing represented as a percentage of the property’s value. A higher LVR may require lenders mortgage insurance (LMI) if it’s over 80%.
• Repayment Options: Investment loans can offer different repayment structures, such as interest-only payments, where you only pay the interest for a certain period, or principal and interest payments.
• Loan Structure: You can choose between fixed-rate loans, where the interest rate is locked in for a certain period, or variable-rate loans, where the rate can fluctuate with the market.

Qualifying for an Investment Loan

To qualify for an investment loan, you’ll need to:

• Demonstrate Serviceability: Show that you can afford the loan repayments on top of your existing financial commitments.
• Have a Deposit: Typically, a larger deposit is favourable as it reduces the LVR and the need for LMI.
• Possess a Good Credit History: A strong credit history can help in securing loan approval and possibly better interest rates.
• Provide Investment Plans: Lenders may require a clear and viable investment strategy for the property you wish to purchase.

Considerations for Investment Loans

• Interest Deductibility: The interest on an investment loan is typically tax-deductible when the property is rented out or available for rent.
• Cash Flow Management: It’s crucial to manage your cash flow effectively, considering rental income against the costs of property investment, including loan repayments, property management fees, and maintenance costs.

Investment loans can play a vital role in growing your investment portfolio. Familiarising yourself with the various aspects of these loans can help you make informed decisions about property investment.

Should you have any further queries regarding investment loans or wish to discuss your property investment ambitions, our team is here to provide the support and information you require. It’s our commitment to assist you in your pursuit of property investment success.