With any kind of investment, it’s important to consult people who understand the industry like the back of their hand. WE do! Get in touch, and we’ll be happy to demystify any questions you may have.
Know the Difference
While there are certain similarities between a Home Loan and an Investment Loan, they are not one and the same. Investment loans allow the property-generated income generated to be included in serving the loan. Nearly every lender’s product is available to Investment Loans, however, owing to government regulation changes, lenders are forced to restrict their new investment lending. This has resulted in investment loans being priced higher than regular owner-occupied loans.
Interest-Only Investment Loan is different in the way it is repaid. Conventional Home Loans involve repayments that include interest and a small percentage of the principal. Interest-Only loans, however, repay just the interest part of a loan over a specified time-period. Usually, this is up to five years. The principal amount won’t be reduced. However, you will be able to reap the rewards of a lower monthly repayment number.
The Australian Prudential Regulation Authority (APRA) has clamped down on interest-only loans. Essentially removing them from the owner-occupied product range. However, investors can still apply for interest-only loans if it is part of their overall investment strategy.
Interest-Only products that suit your goals
Interest-only loans provide an attractive range of benefits, including more flexibility to make more repayments, the ability to redraw, tax advantages, and ultimately, lower monthly repayments. However, there are two sides to every story – and it’s important to be aware of the cons of Interest-Only loans too.
In this regard, you may experience a higher interest rate charged by your lender. Credit approval may prove more challenging, and you may be subject to additional lender fees. With limited LVR (loan-to-vale) ratios, it’s a good idea to consult trusted experts before making any decisions. We can help you avoid common pitfalls and reach your goals.
How to buy an investment property
Ready to purchase an investment property? There are five steps to success in this regard:
- Secure independent financial advice from trusted experts (REAG)
- Gain more clarity on your goals, why you’re investing, and what you hope to achieve.
- Determine your investment strategy and appropriate structure for your future.
- Do your homework – researching the property market to promote a wise investment.
- Purchase a property with confidence and peace of mind.
TIPS: Countless property investors benefit from tax savings through “negative gearing”. This means the return from your rental income is less than the cost to borrow. This can subsequently be used as a tax deduction. Don’t understand these techniques? Be sure to seek the advice of an expert financial planner or investment coach. The more the world evolves, the more scams arise. Don’t be another statistic. It’s not uncommon for property investors to be overcharged, losing more than they gain.