Approval process when buying an investment property interstate

Any general questions you might have in regards to loans and finance.
MollyB
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Joined: Thu Jun 20, 2019 3:52 pm

Approval process when buying an investment property interstate

Postby MollyB » Thu Jun 20, 2019 3:54 pm

Hi, I’m close to paying off my first house in NSW and I’m thinking of buying an investment property interstate either in QLD or VIC, found a couple I think could be a decent investment. Ideally, I would want to get a pre-approval before I visit some prospective properties. What’s the process to get preapproval for an investment home loan?

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Otto Dargan
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Re: Approval process when buying an investment property interstate

Postby Otto Dargan » Thu Jun 20, 2019 5:00 pm

Hello Molly. Welcome to the forums.

Buying an investment property interstatecomes with its own challenges and getting a pre-approval is the first step in that process. Getting a home loan pre-approval can ensure you can negotiate confidently with vendors whether it’s at auction or not.

The criteria for approval for investment loans is quite complicated especially if negative gearing benefits need to be considered to prove that you can afford the loan. An expert mortgage broker can help you navigate lender policy on:

  • Postcode restrictions: Lenders generally consider metro locations, capital cities to be low risk. You check out our postcode location guide/calculator to get an idea.
  • Loan to value ratio (LVR): Lenders use LVR to assess your home loan application. Anything LVR above 80% is considered high risk and will incur Lenders Mortgage Insurance (LMI).
  • Negative gearing: Only a few lenders will allow negative gearing benefits to factor into your borrowing power. The key is to apply with the right lender.
  • Property type and titles: Each lender has specific policies to the type of property they’ll accept as security. Property titles also tend to vary between states as this can determine your chances at approval.

We specialise in investment loans.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an investment home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

MollyB
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Joined: Thu Jun 20, 2019 3:52 pm

Re: Approval process when buying an investment property interstate

Postby MollyB » Thu Jun 20, 2019 5:53 pm

What are some things I need to be aware of when buying interstate? Are there any restrictions?

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Approval process when buying an investment property interstate

Postby Otto Dargan » Thu Jun 20, 2019 6:46 pm

Hi MollyB,

We’ve created a handy little guide when buying an investment property interstate.
Basically to surmise:

  • Do your due diligence: Research the area properly, don’t assume what works in your area works everywhere. The Australian property market is not one national market.
  • Visit the area: Talk to locals, find the local council ‘s development plans and go to as many prospective properties as you can.
  • Consult experts: A buyer’s agent can be an invaluable asset when buying property interstate in an ultra-competitive real estate market. You’ll also need to consult a knowledgeable solicitor/conveyancer, reliable property manager and an expert mortgage broker.
  • Consider the drawbacks: You’ll likely have difficulty managing the property and will have to spend significant time and effort to research the area and the property. There are significant costs to be considered when hiring experts.
  • Do the math: You’ll have to calculate your weekly cash flow and calculate the total cost of purchasing a property. Once the math checks out. It’s time to decide to go in or to walk away.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

MollyB
Posts: 3
Joined: Thu Jun 20, 2019 3:52 pm

Re: Approval process when buying an investment property interstate

Postby MollyB » Thu Jun 20, 2019 7:25 pm

What are the differences in stamp duty, Contract of Sale etc when buying between NSW and QLD or VlC? Anything else I need to be aware of?

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Otto Dargan
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Location: Sydney, Australia
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Re: Approval process when buying an investment property interstate

Postby Otto Dargan » Thu Jun 20, 2019 7:57 pm

Hi MollyB,

There are some stark differences when buying property interstate:

  • Stamp duty: Stamp duty differs from state to state. You can use our stamp duty calculator to get a pretty accurate estimate of the stamp duty fee.
  • Contract of Sale: There are subtle differences when buying in NSW vs VIC or QLD. For example, Unlike QLD, if a party fails to settle on the settlement date in NSW, the other party cannot immediately terminate the contract. A standard 14 days ‘notice to complete’ must be served to the other party; it is only after this notice has been issued that the contract can be terminated.

We recommend hiring a conveyancer that is experienced in handling conveyancing and property matters in the state you’re buying in.

Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our free assessment form to find out if you qualify for an investment loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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