Investment Loans

Investing in property

There are some clear steps to follow when you are looking to buy an investment property. The steps below are a guide to how the process works, both for first time and experienced investors. 

1. Set your goals
Answering a few simple questions can help you to get a clearer picture of your investment goals, after which we can arrange an online or in-person meeting to discuss the way forward. 

2. Examine your options
We will help you to determine any potential equity in your current property and the borrowing power you are likely to have. We’ll then examine a wide range of lenders’ investment loan products to find those which are best suited to your needs.

3. Completing the application
Once a suitable loan and lender have been identified, we will oversee your application to ensure that all documents and completed and lodged correctly and on time.

4. The pre-approval stage
Once pre-approval for a loan has been given, you will have a full understanding of your borrowing power and so can start the process of purchasing your investment property.

5. Support throughout the process
Once you have found an investment property, we will ensure that all paperwork and procedures are completed, and that your loan and purchase is fully approved by your lender.

6. Finalising settlement
In order to facilitate settlement, we’ll liaise with your solicitor and conveyancer in order to ensure that the final stages of the contract are all carried out correctly and in a timely fashion, 

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Investment Home Loans

There are a variety of different loan types available to you when you are investing in property. Our experienced mortgage specialists will work with you so that you understand the benefits of each type of loan, and which variety of mortgage will work best for you. 

Variable rate loan

With a variable rate loan, the rate of interest applied will change over the life of the loan (potentially a number of times), which means the amount you repay each month will change as well. This type of mortgage normally offers a range of features, such as the ability to make additional repayments or a re-draw facility. 

Fixed rate loan

A fixed rate loan means that for a set period of time, your interest rate and monthly repayments remain constant, regardless of any changes in the base rate by the RBA. At the end of the fixed term, you may have the chance to enter another arrangement, or alternatively revert to a variable rate home loan. 

Split loan

A slit loan enables you to segment your loan, so that one part operates as a fixed rate loan, with the other part working as a variable rate loan. 

Packaged loan

A packaged loan is one where the lender also offers special features and other financial products as part of your home loan, such as reduced or waived fees. You are usually charged an annual fee for a packaged loan. 

Introductory rate loan

This type of loan (sometimes referred to as a honeymoon loan) gives you a lower rate of interest during the early stage of the loan (perhaps for a year), after which you would then move to a more conventional variable rate loan.

Interest only loan

With an interest only loan, you will only be required to pay the interest due and not the principal of the loan for a set period of time. After the agreed period ends, then you will begin paying both the interest and the principal. 

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Property Investment Strategy

Before investing in property, it’s important to have a strategy, a clear idea of your property goals, and what you are planning for your long-term financial future.

Rentvesting

First time investors often employ this strategy, which essentially means continuing to rent in the area where you are currently living while buying an investment property elsewhere. 

Using the equity in your home

Any equity that you have built up in a property can then be used as part of the deposit for an investment property (bearing in mind that this will also mean refinancing your current home loan).

Positive and negative gearing

Whether a positive or negative gearing approach is right for you will depend on your property investment goals. 

Positive gearing means that you are deriving more rental income from your property than it costs when all repayments, charges, taxes, etc., are taken into account, and so you are essentially making ongoing income from the property. You will, however, be taxed on this income.

Negative gearing means that the costs associated with owning an investment property exceed the rental income, meaning you are paying a portion of the mortgage each month out of your own pocket. However, expenses incurred from owning the property can be treated as a tax deduction, and with most negative gearing strategies, it is anticipated that long-term capital growth will ultimately compensate you for any short term losses.

Each of these property investment strategies have their relative advantages and disadvantages, so talk to one of our experienced mortgage specialists to find out which approach would be best suited to helping you reach your financial goals. 

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Calculators

These calculators are a helpful tool for determining how much borrowing power you will have so that you can refine your property search, as well as the amount of Stamp Duty you are likely to incur. 

How much can I borrow?

Knowing how much you are likely to be able to borrow is crucial as it influences your property searches, and ensures you don’t waste time considering unrealistic options. 

How much is Stamp Duty?

You will need to allow for Stamp Duty in your planning, and this easy-to-use calculator shows how much you will be liable for, depending on where the investment property is located, its cost, etc.

FAQs about investment loans

Will I have to pay fees when buying an investment property?

In addition to the actual purchase price, buying an investment property does come wth other fees, ranging from building inspection costs, to stamp duty, to mortgage registration fees. Your mortgage adviser can help you to understand the full range of liabilities that come with buying a property.

Can I buy an investment property using equity?

The equity you have built up in your current home can be used in the purchase of an investment property in a variety of ways, including as a deposit, to fund renovations, or to take out a line of credit. 

How do I know what sort of investment loan will work best for me?

Depending on your financial goals, an investment property loan can be designed to deliver ongoing income or long term capital growth. Your mortgage adviser will work in close collaboration with you to decide which strategy is going to most effectively help you reach your property goals.