Looking for the right investment loan?
Talk to your local Norwood and Campbelltown investment loan experts.
When you are looking to invest, choosing the right loan to fund your investment is essential to maximise the return you receive. Your local Norwood and Campbelltown Mortgage Choice broker can help you compare hundreds of options.
How we can help you with your investment
Just as it is important to research the market for the ideal investment property, it makes sense to shop around for a loan that offers competitive rates and fees while still providing the flexibility you need to make the most of your investment.
This is where the expert advice of your local Norwood and Campbelltown Mortgage Choice broker can be extremely valuable. They can compare hundreds of loans from a wide choice of lenders and advise you on the finer details of each option that could save you money in the long term.
Investment mortgages may come with a slightly higher interest rate, although this will depend on the lender, the area in which you buy and the type of property you select. However, broadly speaking, your investment will be similar to a home loan - you will be required to make repayments based on the loan principal, interest rate and term.
Investment loan options
Like an owner occupier, you can choose to use a basic or more feature-filled standard variable rate loan to fund an investment property. However there are certain loan options that can offer particular benefits to landlords.
Fixed rate loans
Many investors choose to fix their mortgage interest rate. With a fixed rate loan, the annual interest charge for each year is known upfront. This means landlords can prepay up to 12 months of interest each year - a cost that may be claimed as a tax deduction.
This can be a way of evening out your tax bill in years when income from other sources (such as wage and salary payments) is higher than normal. The success of this strategy hinges on having sufficient cash to prepay interest, and it’s always sensible to speak with your tax advisor to ensure you can claim the full interest charge as an expense in the current tax year.
Interest only loans
Unlike most other loan types, interest only loans involve payments that solely include loan interest - there is no repayment of the principal. The principal is repaid when the property is sold. As some investors aim to make a profit on the sale of the property rather than eventually owning it outright, an interest only loan can be appealing for landlords.
This type of loan offers two key advantages - first, the monthly repayments are usually less than for a principal and interest loan. Secondly, all your repayments are tax deductible as they don’t involve capital repayments of the loan. Most loans permit interest only payments for a limited period, generally up to five years. After this you will need to renegotiate the loan payments with your lender.
Line of credit
A line of credit loan allows borrowers to withdraw cash from their loan up to a certain limit as and when they choose. Each month the loan balance is reduced by the amount of cash coming in and increased by the amount paid for drawings, direct debits or cash withdrawals. There are usually no set repayments, so this loan is best suited to experienced investors with the discipline to manage the loan carefully.
For tailored advice to suit you, speak to one of our expert investment loan team, who can suggest the type of loan best suited to your individual situation, goals and budget.
Before you start hunting for an investment property, it's worth considering several important factors:
Your current financial position. Are you well placed to afford an investment property, particularly during the inevitable periods of vacancy?
Can you afford a quality property? Can you afford a property that will attract decent tenants and deliver healthy long term price increases
Where are you heading? Are you prepared, and can afford, to hold onto your investment for the long term? Will you need access to your capital (money invested) in the near future?
How much money will you need? As with your home, purchasing an investment property can involve significant upfront costs and ongoing maintenance expenses.
How much can you afford to borrow? Getting an idea of your borrowing capacity is the first step in finding out the type of property and location you can afford.
Do you need a cash deposit? If you own your home, did you know you may be able to use home equity instead of a cash deposit?
Property investor guide
Our free, downloadable guide explains the costs and steps associated with the purchase of an investment property, positive/negative gearing as well as pros and cons of houses vs. units.
Finding the ideal property
Your investment property will ideally meet two key criteria - being affordable for you, and appealing to a wide range of tenants.
In the first few years of being a landlord, it's likely your property will be negatively geared, which means it costs more to own the property than it earns in rental income. While this can offer tax savings, you still need to be confident that you can cope with the expenses. Even the best properties experience some periods of vacancy, so you also need to be able to cover loan repayments when the property is not generating income.
No matter how affordable a property is for you, it won’t be a successful investment if it doesn't attract quality tenants. Consider properties objectively and think about whether you’d be happy to live there. If you're not sure, prospective tenants are likely to think twice too. See our section on finding the right investment property for more details on enhancing tenant appeal.
Once you have a clear picture of your current position, your personal goals and your ability to afford an investment property, you’re ready to start creating - or adding to - your investment property portfolio!
Get started with investing
Many Australians hold investments but have you ever stopped to wonder if your portfolio is really working in your favour? Professional advice takes the guesswork out of investing.
This quick video gives you some insights into getting started with investing.
We're here to help!
So whether you're a seasoned investor or looking to buy your first investment property, our investment loan experts can try and help find you the best deal. We'll be here for you at every stage of the process.
Contact us at 8165 3596 to make an appointment with our expert team.