Investment loans
Why should you borrow to invest?
It is almost impossible to save up enough to buy an investment property outright isn’t it? That’s the biggest reason why people use investment loans, so that they can invest now with a mere fraction of the total funds they need!
Imagine if you had a business partner that would front up with the money you need for your investments. That is how you should see your bank, because with investing their interests are linked to yours!
Negative gearing benefits may apply if you have a high taxable income. Why not talk to your accountant or financial planner to see if you would benefit from a negatively geared investment property.
Investing in property?
Are you looking to buy an asset for some extra passive income and potential tax benefits? Investment property is the answer!
Whether you are new in property investment, or you already own a significant real estate portfolio and wanting to refinance, the Home Loan Experts can help!
Why property investment?
The big plus with property investments is that they are highly leveraged. Utilizing leverage means that with a minimal amount of funds available, you can magnify your potential return.
Potential tax benefits are another reason why so many people out there invest in real estate. Interest charged on an investment loan is generally tax deductible. Property investment reduces your tax bill, hence the holding costs of your investment property.
Many first home buyers choose to buy an investment before they buy their first home. Because your borrowing capacity is usually higher with an investment home loan, you can purchase your desired home now, rent it out and move in later when you can afford it!
Investing in shares?
Yes you can use an investment loan to invest in pretty much anything! Shares, business, options and anything else that banks would consider to be a worthy investment. Did you know that a residentially secured investment loan is cheaper than a margin loan? By using your home or investment property as security you can avoid margin calls and save on interest!
Some banks have restrictive cash out policies that can restrict your share market investing, so please talk to us to find out which lenders can help with your investment loan.
Servicing your loan
Did you know that different lenders look at your income differently? Some allow potential rental income to be 100% utilized; some can take future tax deductions such as negative gearing into account when assessing your serviceability. Unbelievably, some lenders actually assess your loan based on interest only repayments which multiplies your borrowing capacity.
We know which lender can help and get your loan approved! Note that we believe in responsible borrowing and will not help you obtain an investment loan if in our opinion it will put you into financial stress.
What do lenders think?
From a bank’s point of view investors tend to borrow more so tend to be higher value clients. However, an investment loan is typically a higher risk to the bank. Consider this, if you had a home loan secured by your home and an investment loan secured by your investment property, which would you pay for first if you were in financial strife?
In the event that a bank has to sell your investment property to recover your debt they may have problems with the tenants refusing to move out or trashing the property. It is for these reasons that banks tend to have lower LVRs (Lend less as a percentage of your property value) and stricter lending guidelines!
The trick to choosing a bank to partner with for your investment loan is in finding a bank that encourages investors, not one that has a conservative view of investment loans. We know which banks like dealing with property investors, do you?
Which lenders can help?
A range of both Bank and Non-Bank lenders can consider investment loans. Each lender has their own specific strengths and weaknesses so we do not recommend lenders until we have seen your full details.
Which loan types are available?
All loan types: Professional packages, basic loans, lines of credit, fixed rates.
How much can I borrow?
You can borrow up to 100% of the property value. Note that for 100% LVR investment loans (100% of the property value) without additional property as security there may be asset requirements. First home buyers may need their parents to guarantee the loan and other investors may need to show that they have assets in shares or cash.
There is a 106% LVR investment loan available which can help you enter the property market sooner, however it is more expensive than a 100% LVR investment loan.
Investment loans are usually acceptable up to $600,000 at 106% or 100% LVR, $1,000,000 at 95% LVR and $1,500,000 at 80% LVR. Above that is on a case by case basis, usually capped at 75% or 70% LVR.
What can I use the loan for?
All investment purposes that are not illegal are acceptable to our lenders. Investment loans can be used to invest in property, shares, managed funds, options or business.
Who this loan is for?
Anyone who wants to invest. Most investors tend to be professionals with high taxable incomes.
Who this loan is not for?
Generally if you have a poor credit history investment loans are so expensive that you will not make a decent return on your investment.
Discounts
Investment professional package and Investment basic loan discounts are available.
Loan features
All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, and extra repayments.
Get the right investment advice…
The right investment home loan really depends on your particular financial goals. There are many different borrowing options and strategies available, talk to us today and find the best deal out there that suits your situation!
Talk to us to obtain a quote from a lender, not to obtain financial advice. We recommend that you seek independent financial advice before borrowing money to invest.
