Property investment remains a popular option to building wealth in Australia, but the success of your investment not only depends on choosing the right property but also the right investment loan.
Investment loans aren’t much different than an ordinary home loan. However, to create a successful property portfolio you need to have a well-thought- out investment strategy that will determine the kind of loan you require.
When it comes to investment loans, there are a number of different types of loans investors can choose from, for example:
Construction Loans – If you plan to construct your own property, you could choose a construction loan. A construction loan is usually drawn upon the major stages of construction, which means you only pay interest on the amount you use until construction is complete.
Equity Loans – If you’re a seasoned investor and already own property, it is possible to use the equity in one property to secure another home loan for your next investment property. This allows you to cash in the equity in your existing property to fund the deposit on your investment loan.
Interest Only (IO) Loans – With an IO loan you can choose an interest-only period of up to five years, where you only pay the interest on your mortgage, resulting in lower repayments during the period. While this option allows investors to benefit from tax deductions applicable on interest repayments (due to lower repayments), it is important to remember that repayments can increase by over 40% once the interest only period is over.
Principle and Interest (PI) loans – A P&I loan is mostly preferred by owner occupiers who want to pay off their mortgage as soon as possible to own their property. The repayment amount on a P&I loan comprises interest and a part of the principle so that you pay some of the original amount along with the interest right from the outset. Gradually, as the principle reduces, so does the interest payable on it.
Whether you’re a first-time investor or a seasons property veteran, seeking professional help from a knowledge broker is vital to your success and scoring a competitive loan.
At IN2Mortgages, we have a team of professional and knowledgeable investment loan specialists who work with you to build an investment strategy and secure the most competitive loan from over 60 lenders, including major banks, non-bank lenders and private funders.
For more information on Investment loans or to book a meeting with our investment loan specialists, fill out our dorm or contact us on 0418 646 441 today.