Higher investment loan rates for my holiday home?

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Otto Dargan
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Re: Higher investment loan rates for my holiday home?

Post by Otto Dargan »

Hello awesome.

Welcome to the forums.

Lenders will consider the predominant purpose of your property before giving out a home loan. As your holiday home is expected to generate income for over 6 months in a year, it’s likely you’ll qualify for a residential investment loan to finance the renovations.

You won’t need to pay a higher interest rate for your holiday home and will likely qualify for standard competitive interest rates unless you’ve got bad credit or you’re in a bad financial situation.

If you have a bad credit history; you have defaults, judgments, missed repayments, too many enquiries or any debt agreements on your credit file then you may need to apply with a specialist lender at a higher interest rate.

By the way, will you be fixing your investment loan or going variable?

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

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Higher investment loan rates for my holiday home?

Post by Otto Dargan »

Hi awesome,

You can have a look at the should I fix my home loan page to get an idea of whether or not you should fix your investment loan.

Generally, a fixed rate investment loan may not be a suitable choice if you’re planning on:
  • Selling or transferring the title of your property.
  • Making large extra mortgage repayments.
  • Renovating or building a new home, where often you may need to refinance.
  • Switching or refinancing your investment loan.
This is mainly because fixed rates tend to have high exit fees known as break fees that you need to pay if you break the fixed rate contract. You may also not be able to make large additional repayments; usually no more than $10,000 per annum before penalties apply.

However, you may consider a flexible fixed rate investment loan if you’re planning on making extra repayments. This is essentially splitting the loan to be half fixed and half variable, but this won’t be suitable if you’ll be selling or refinancing because you’d still have to pay large exit fees.

If you’re still not clear whether or not you should fix, you can have a look at our website. You can also discuss things directly with one of our specialists by calling us on 1300 889 743 or by fill in our free assessment form.

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

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Higher investment loan rates for my holiday home?

Post by Otto Dargan »

Hi homer,

Only a handful of lenders may allow you to make large extra repayments and have access to other features like redraw and line of credit, without any restrictions on a flexible fixed rate loan as long as you don’t pay off the loan completely.

Here is a list of some of the big lenders who allow this, including their policies regarding extra repayments:
  • ANZ - You may pay up to $5,000 per annum or 5% of the original loan amount, whichever is lesser.
  • CBA - You may make up to $10,000 extra mortgage repayments per annum.
  • NAB - You may make extra mortgage repayments of up to $20,000 during the fixed rate term.
  • Rams - You may pay up to $30,000 during the fixed rate period.
  • St George - Like Rams, St George also allows you to pay up to $30,000 during the fixed rate term.
If you want to find the cheapest fixed rate and someone else to handle all the paperwork for you, give us a call or browse through our website.

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

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