Purchasing an investment: Rates starting from 2.44%

 

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Investment Loan

Diversify Your Portfolio With an Investment Loan

Looking to diversify your portfolio with an investment that comes without the terror of margin calls? Our investment property specialists can help get you set up with a home loan specifically geared towards investing in a solid, tangible asset that can help you generate income for years to come.

Whether you’re looking to capitalize on the equity of your current home loan or are a seasoned property investor, we’d be happy to chat about how we can help you reach your goals.

We’ll Take Care of the Hard Parts

From searching for the best interest rate to finding a home loan with all the right perks, our goal is to comb through all the options so you don’t have to. We’ll get to know you and what you’re looking for and then narrow it down so we can present you with the best possible options for your unique circumstances and goals.

We Keep It Simple

We believe that everyone deserves the best possible loan, whether they’re financial wizards or not. That’s why we’ll break things down for you into understandable language and answer any questions you may have. Because finding the best loan at a great interest rate shouldn’t add unnecessary stress to your life.

Why invest in property?

One of the hardest parts about borrowing to invest can be deciding exactly what it is you want to invest in. These days there are plenty of options, from exchange-traded funds, stocks, managed funds, and everything in between.

While we always recommend that every investor seek independent advice from a qualified financial adviser, purchasing an investment property can be a very profitable move for the right investor.

Investment properties have become a popular investment strategy for many Australians of late and can come with plenty of benefits. These include things like potential tax benefits, passive income, and potential capital growth.

The right property investment can also make for a relatively stable way to put your money to work. Investment home loans can also be less risky than other forms of investment lending such as a margin loan which can get ugly very quickly if your investments fall.

Can I use the equity in my home as a deposit?

You sure can. If you’ve already paid off enough of your existing home loan to build a reasonable amount of equity, you may be able to leverage up to 80% of it to cover the deposit on an investment loan.

Depending on your financial situation, this may be far easier than saving up to cover the deposit on an investment home loan out of pocket. A larger deposit can also lead to lower interest rates and potentially save you from having to invest in Lender’s Mortgage Insurance, both of which will help lower your long-term loan balance.

How do you qualify for an investment property loan?

Borrowing to invest, whether in exchange-traded funds or property, is unfortunately never without its risks. While an investment loan can be a solid way to raise capital for a savvy investor, lenders tend to be fairly picky about giving out even a minimum loan until they’re sure you can afford the repayments.

In the end, this is for the benefit of both investors and lenders alike, as there’s nothing worse than struggling to come up with borrowed funds. Whether or not you qualify for an investment loan offer will depend on things like:

The size of your deposit

While the point of any loan is to borrow money, it’s highly unlikely you’ll find a lender willing to cover 100% of your investment property price. Most will expect you to cover a minimum of 10%. The higher the deposit you can make, the better, as it will likely affect the interest rate of your investment loan.

Employment and Expenses

Unfortunately, unemployment may not be the best time to seek loan approval for your next investment property. Lenders will want to ensure that you can afford to make not only repayments now, but throughout the life of the loan. They’ll likely take your employment into account as well as your existing loans and other expenses to see if you meet their eligibility criteria.

Your Credit

It will probably come as no surprise that a credit check will come into play when determining your borrowing amount. Before taking on an investment loan, you’ll want to be very solid financially. This means that you’ll ideally have an above-average credit score and a long, consistent history of making payments on time. Many investment loan customers tend to be financially secure individuals with a high taxable income.

Are all property types acceptable?

When it comes to investment loans, not just any property will do. Most banks that engage in investment lending tend to require that a property measure up to certain criteria.

The property should:

  • – Comprise a standard house, unit, townhouse, or land with construction
  • – Have a 50m² or great living area
  • – Be not only inhabitable but in good condition
  • – Be located in a town of at least 10,000 people (bonus if its in a bigger city)

While this may seem a bit picky, these standards were developed because when a bank gives you an investment loan, they genuinely want you to succeed.

Make no mistake; this isn’t due to the kindness of their hearts. But your success for you means that you’ll be able to make your home loan repayments on time for the life of the loan.

The specific property you choose and how much money you expect to make from it can actually play a large role in the loan amount and comparison rate you’re able to get.

Things can get tricky when something called “negative gearing” comes into play.

In simple terms, negative gearing borrows investment money to make a purchase that will earn you less of a return than it costs you. For instance, if you were to take out an investment loan to buy a property that would not generate enough rental income to cover your loan repayments and other ongoing fees associated with property ownership.

That said, you may be able to offset the negative gearing against other income to provide tax savings. This is a situation in which we’d highly encourage that you seek the independent advice of your broker or financial advisor.

What is the maximum interest-only term?

An interest-only investment home loan is pretty much exactly what it sounds like. This type of loan will allow you to make interest-only repayments on your total borrowing amount for a fixed term. While the length of the term can vary based on the lender, some banks offer interest-only payments for up to 10 years.

When the term ends, you’ll then be expected to begin paying both principal and interest instead of just interest repayments throughout the rest of the life of the loan. Interest-only loans tend to be a bit more common among investors than those seeking an owner-occupier home loan.

Nonetheless, it’s important to understand the risks involved before taking on such a loan, as well as the fact that it may lessen your borrowing power.

These types of loans tend to be for investors who are attempting to free up cash by sticking only to interest repayments while they pay off an owner-occupier home loan that isn’t tax-deductible or those who plan to make maximize cash flow for other investments.

While an investment loan can be great for an investor with the right outlook and personal objectives, it’s important to know the full details as far as costs are concerned. Here are several expenses you should be aware of beyond the price of the property and interest rates.

Stamp Duty

Whenever you purchase a property, you’ll need to be aware of the stamp duty taxes in the area. Stamp duty is required within 30 days of your property settlement and varies according to different states and territories.

Lenders Mortgage Insurance

Lenders Mortgage Insurance of LMI may be an expense you’re able to escape depending on the size of your deposit. Common investment lending practice usually only insists that borrowers who put down a deposit of less than 20% of their total borrowing amount purchase LMI. This type of insurance is designed to protect the lender in the event that you aren’t able to repay borrowed funds.

Valuation Costs

It’s common for lenders to ask for you to convert the costs of a property valuation in order to help them determine the correct value ratio. This isn’t always a bad thing, however, as it may result in favorable comparison rates if your prospective property achieves high marks.

Conveyancing Costs

Conveyancing is when you’ll have the legal title of land (property) transferred from the previous owner to yourself. This will involve hiring either a conveyancer or solicitor to make sure the property you purchased with the loan is officially in your name.

Approaching investment loans for the first time can be both exciting and a bit intimidating. That’s why we encourage everyone, from first-timers to seasoned investors to seek independent advice from our investment and home loan specialists. We’ll guide you through each step of the way in order to assure that you get and stay on the right track to financial success. Here’s a brief overview of what you can expect from the investment property loans process

Finding the Right Property

This is the fun part, where you get to decide whether you’d like to purchase a house or a unit and where you’d like it to be located. Researching high-growth areas can help you decide on a property with great long-term potential.

Decide on Your Price Range

Now we’ll take a look at your financial situation, including your income and expenses, home equity, and how much of a deposit you’d like to put down. We’ll also help you factor in additional expenses that may pop up throughout the buying process so they don’t sneak up on you.

Search for the Best Loan for You

For the average investor seeking a home loan, this is the point where things start to get a lot less fun. Between comparing a variable rate loan to fixed-rate loans and pinpointing the perfect loan amount, loan term, and interest rate, the whole process can get overwhelming quite quickly. The good news? There’s no need for it to happen to you.

We’re here to take on the investment lending legwork so you don’t have to. First, we’ll help you strategize to decide what type of loan is best for you. Should you go with fixed-interest rates, fixed-term, or a variable rate? Want extra perks like unlimited extra repayments or repayment holidays?

Once we’ve got a good idea of your ideal loan, we’ll set out in search of the best investment lending options for you. We’ll then narrow it from dozens of possible investment loans to just a few that best suit your circumstances and present you with the full details on each. Our goal is to find you the best principal and interest combination at the best comparison rate for your financial situation.

Purchasing Your Investment Property

At this point, it’s always a good idea to get pre-approved for a loan at the best possible comparison rate. That way you’ll know the minimum loan amount you can expect to receive once you find the right investment. After all, there’s nothing worse than searching for months, finding the perfect property, and then discovering it sold while you were waiting for the loan to go through.

We’ll help you stay prepared every step of the way so that you’ll be ready when the perfect opportunity presents itself.

Stay in Touch

Everything we do is with our customers’ best interests in mind. That’s why we’ll stay in touch at loan milestones throughout your investing journey. We want to make sure you get the best principal and interest possible throughout the length of your loan and are always happy to help if you ever have any questions.

Download Your Free Guide.

In addition to your deposit, there will be other upfront fees and charges. Calculate your stamp duty using our simple calculator.

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