Regardless of whether you are looking at residential or commercial property investment, or building a share portfolio, there’s a lot to consider with regards to correctly choosing and structuring an investment loan that meets your needs and goals. If this is not done correctly it can cost you thousands! We will work with you and your financial/tax advisors to ensure that the investment loan you choose is the right one to suit your purposes.
Investment loans vary depending on what you are looking to achieve, and can be either quite complex with effective use of tax, gearing and repayments, or very simple (like your standard home loan). You can also make good use of loan features such as redraw and offset accounts to help manage your investment loan and build a foundation for future investments.
Finding the best investment loan
Choosing the right investment loan is not always about getting the lowest interest rate. The best loan for your investment property is the one that works best for your total investment strategy.
This means that a loan with a really cheap interest rate could be absolutely pointless to an investor wanting to buy and then re-sell quickly if that same loan comes with a huge application fee and an even bigger penalty fee for leaving the loan. The overall profit would be severely reduced by the massive cost of fees.
This could also mean that an investor who simply wants to buy a rental property and keep it for years and years just for the rental income with no thoughts of selling the house could be missing out on much cheaper interest rates available or alternative loan options than the ones their bank offered over the counter.
These examples are just a few ways that investors could be losing money by not making the effort to find the right investment home loan to suit your individual investment strategy.
Choosing the right investment loan structure
Many first time investors assume they will need a deposit to purchase an investment property. The fact is, many banks may allow you to use the equity in your own home to secure the entire cost of purchasing your investment property.
The type of home loan you choose can also be an important consideration for your overall investment strategy. Different types of home loans have vastly different levels of flexibility. The amount of flexibility you need will depend on your ultimate investment goals. You should understand the difference between an investment loan that is designed to help you reduce debt more rapidly and an investment loan that can actually help you to purchase more investment properties in future.
We will work with you and your financial/tax advisors to find the best possible investment home loan options to suit your needs.