Investment Property Finance in Australia
Getting the right investment advice and choosing the right loan can be as difficult as finding the right investment property.
Should you borrow from a bank, a credit union or through a finance broker? Is it worth paying extra for a loan with more features?
There is a large variety of loan products so it is advisable to seek professional advice and choose the type of loan that is suited to your particular circumstances.
Mortgage brokers can make the job of selection a suitable mortgage much less time consuming they know your requirements.
Before engaging someone to carry out the selection process, it is wise for you to have a good understanding of the selection criteria and the basic types of loans available.
Types of Loans
The loan structure you choose will determine the flexibility you have. Investors should think about this before choosing their loan.
Do you simply want a no frills loan with the best available rate? Would you like to vary the size of the loan without lots of paperwork? Would you like to vary your repayments?
If you have a self managed super fund (SMSF), it is now possible to buy investment property with the SMSF. Have a look at our Secure Growth Member page on Retirement Funds.
Principle plus Interest Loan
A traditional principal and interest loan for the purpose of buying the property, is known as a Standard Amortising Loan.
You take out the loan over a period of typically 10 to 25 years and pay a fixed repayment per month to cover interest and capital reduction over the life of the loan.
Interest only Loan
The loan repayments only cover the interest charged on the money borrowed. At the end of the loan period you still owe the same amount of money, but the property value will have increased significantly, giving you more equity in the property.
This type of loan is very popular for property investors because it improves cash flow and minimises your out of pocket expenses.
Line of Credit or Equity Loan
Pre approval is given to borrow money against the equity in your existing property. Very popular with property investors because it allows you to draw down and payback the loan amount at will.
Good Advice can Save you Lots of Money!
If you are not familiar with loan finance, please discuss it with our experienced staff. While we are not financial advisors, we can give you general guidance and direct you to suitably qualified professionals.