Last Updated: 3rd March, 2023

No matter how eager you are to break into the property market, you shouldn’t dive right in.

There are so many traps to be wary of, and you don’t want to be left with a property that performs poorly.

It pays to be prepared in all aspects of investing, and the first step is getting a home loan that best suits your long term strategy.

How Can I Qualify For An Investment Loan?

When it comes to investing in property, finance is king.

You’ll have a better chance at qualifying for an investment loan as long as you can meet the following requirements:

  • Sufficient deposit: You will need at least a 5% deposit to get an investment loan. If you want to borrow more, you may also need to show that you have equity in other properties. There are no deposit investment loan options available if you don’t have a sufficient deposit.
  • Genuine savings: Many lenders want you to have saved a certain amount of cash in a bank account for at least three months. This is to show that you’ve saved the money yourself and you can manage your finances.
  • Clean credit history: Many lenders want you to have a clean credit history and a good credit rating.
  • Strong income and stable employment: Lenders will generally require you to show that you have a strong income and stable employment. This helps you prove that you can afford the mortgage. However, if you’re a professional investor who earns solely through investment and you don’t have a job, you’ll need to provide your bank statements or tax returns to prove your income.

Our mortgage brokers have many years of experience and know which banks are more flexible with their policies. We can help you create a strong loan application, so you can get approved the first time around.

You can speak with one of our mortgage brokers by calling us on 1300 889 743. You can also complete our free online assessment form for a free quote instead.

How Much Can I Borrow?

Your borrowing power depends on the strength of your loan application. Depending on which lender you apply with, you may be able to borrow up to:

  • 85% of the property value: By showing that you have a strong income and stable employment, you may be able to qualify for an 85% investment loan. Lenders will also require you to have a 15% deposit with at least 5% in genuine savings.
  • 90% of the property value: With a big deposit, clean credit history and easily marketable investment property, you may be able to get a 90% investment loan. Please note that you’ll need to build a strong case with the lender.
  • More than 90% of the property value: Only a select few lenders offer 95% investment loans. You’ll need a large deposit, perfect credit history and a good investment portfolio. Also, the investment must be a standard property that can be sold easily. Be aware that qualifying for this can be quite difficult.

Please note that if you borrow 80% of the property value or less, you won’t have to pay Lenders Mortgage Insurance (LMI). Lenders generally charge LMI if you borrow more than 80% of the property value.

Where Can I Find The Best Investment Loan Rates?

You’ll likely have a hard time comparing investment loan interest rates because lenders don’t usually advertise their best rates.

However, we’ve published the best rates from our panel of over 50 lenders, so it’s easier for you to shop around.

You can check out these rates on the investment loan rates page.

What Are The Costs Involved In Buying Your First Investment Property?

Buying an investment property is costly. In addition to the purchase price, you also need to factor in the following costs in your budget:

  • Stamp duty: The stamp duty on an investment property can be as high as 6% of the property value. Please note that this varies between states and territories.
  • Valuation fees and associated costs: You need to get a professional valuation to make sure you’re not overpaying. This can cost you around $400 to $600 a pop. You also need to get a building and pest inspections done, which can cost you $600 to $700. If you’re buying a unit, you also need to get a strata report.
  • Loan fees: If you apply for finance, you may have to pay an application or settlement fee. Some lenders may not charge these while others can charge you as high as $900.
  • Legal fees and conveyancing costs: These costs are payable when you invest in property. However, they can be waived for investors in some cases.
  • Transfer fee: You’ll need to pay a government fee to register your name on the property title. This will remove the vendor’s name and official transfer ownership of the property.
  • Lenders Mortgage Insurance (LMI): LMI can amount to thousands of dollars and is payable when you’re borrowing over 80% of the value of the investment property.

You’ll also have to pay ongoing costs including council rates, water bill, maintenance costs, insurance and agent fees, and home loan repayments.

To get an estimate of all these costs, you can check out our property purchase costs calculator before buying your first investment property.

Buying Your First Investment Property FAQs

We Can Help You Buy Your First Investment Property

From getting your finances in order to guiding you through settlement and beyond, the mortgage brokers at Home Loan Experts are here to help.

Overall, we understand your long-term goals and focus on all factors to get you the right investment loan for your first investment property. Call Home Loan Experts on 1300 889 743 or complete our free online assessment form today.