Investing
Investing
Looking to take the next step on the property ladder?
Investing in an additional property is a popular wealth-building strategy with multiple benefits, including rental income, tax deductions, and potential long-term profits**.
*Comparison rates for home loans are based on a loan amount of $150,000 over a 25-year term. Principal and interest repayments. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
**As we have no control over the property market, financial profits and outcomes are not guaranteed.
Discover how a better mortgage rate can save you money.
Contact us today to find out more!
Looking to take the next step on the property ladder?
Investing in an additional property is a popular wealth-building strategy with multiple benefits, including rental income, tax deductions, and potential long-term profits**.
*Comparison rates for home loans are based on a loan amount of $150,000 over a 25-year term. Principal and interest repayments. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
**As we have no control over the property market, financial profits and outcomes are not guaranteed.
Discover how a better mortgage rate can save you money.
Contact us today to find out more!
New to investment loans?
Here’s what you need to consider:
1. Your Deposit:
Your deposit can consist of genuine savings and equity from another property you own. Minimum deposit requirements vary among lenders, with some approving investment loans up to 95% Loan to Value Ratio (LVR). We can help you find the most suitable investment loan based on your equity, deposit amount, and financial objectives.
Tip: Typically, lenders allow up to 80% of your existing property’s value as equity for a deposit, minus any outstanding home loan balance.
2. Consider Rentvesting:
Rentvesting is a popular strategy among first home buyers who aspire to own property but find it challenging to afford homes in expensive city centres where they live and work. As a rentvestor, you continue renting your own residence while purchasing a property in a more affordable location to rent out to tenants.
For instance, if buying in Sydney or Melbourne is out of reach, you might invest in a property in Queensland, where average house prices are more affordable.
Over time, as the property appreciates in value, rentvestors can potentially sell their investment property or use the equity gained as a deposit to buy a home in their preferred location.
3. Your Ability to Make Repayments:
Similar to owner-occupier mortgages, lenders assess your employment income to determine your loan repayment capability. In the case of rental investments, lenders also factor in a portion of your projected rental income.
Additionally, lenders review your living expenses and existing debts. A higher surplus between your income and expenses generally reassures lenders about your capacity to manage repayments on the new loan.
4. Loan Type:
Interest-only loans appeal to some investors due to their lower initial repayments, which can free up capital for other investments. In some cases, rental income may cover these interest-only repayments entirely.
The funds saved by not paying down the principal of the investment loan could alternatively accelerate mortgage repayment on your primary residence.
However, interest-only loans carry risks because they do not reduce debt or build equity. When the interest-only term ends, financial circumstances could have changed, requiring principal repayments that may strain your repayment capacity.
Before opting for an interest-only loan, we advise consulting one of our expert mortgage brokers to fully understand the risks and potential benefits.
