When it is done right, investing in property can help you to build wealth for your future. In Australia, property is currently a very popular investment and many people are enthusiastically jumping into the market to build long term wealth for the family. But it takes careful planning and structuring of your investment property loans for your journey to be a success.
As an investor, how you set up your investment loans can have a huge impact on the success of your property portfolio. Finding creative finance strategies for growing your investment property portfolio has become more important than ever.
Our finance brokers can help with your financing strategy and will work with your other professional advisers, ensuring your property loan structures provide the greatest taxable benefit. We will provide invaluable guidance to help you structure your investment loans correctly to protect your interests and to suit your investment goals.
Ensuring you have the correct investment loan structure is so important when planning for future property purchases.
We would be happy to review your current investment loan structure to ensure the foundations of your portfolio are on solid ground.
Meeting a lenders borrowing capacity requirements is key. Each lender has their own credit criteria, assessment rates and rules regarding negative gearing. Working with one of our brokers allows you to narrow down all the possible options into a investment loan product that will be in your Best Interests.
Over many years we have worked with a number of leading Property Investment Advice companies, helping their clients structure loans and obtain competitive investment finance products to build their property portfolio. We are proud of these partnerships.
When it comes to financing your investment property, there are several different investment loan types to select. Choosing the right one will depend on your investment structure and strategy.
For most investors, a basic investment loan will include all the required features they need. They often have no ongoing fees and competitive interest rates. Offset accounts are available, but for many investors they would prefer that additional functionality on their owner occupied loan account.
There is no need to spend days or even weeks researching the options. Here are the most popular loan types used by property investors in Australia today.
Interest Only Investment Loans
Many property investors favour Interest Only Loans as they allow you to minimise mortgage repayments and outgoing costs in the short term. They require you to pay just the interest on the loan – which is usually tax deductible, and this can cost significantly less compared to repayments on a principal and interest loan. This could be a good idea if you are investing on a tight budget and require the rental income from the property to cover all of your finance costs.
However, with an Interest Only Loan the loan repayments will not pay down the principal of the loan and increase your equity. Instead, you will be relying on rental income and the value of the property increasing over time to make a profit.
It is quite common for accountants to recommend interest only loans for investors who also have owner occupied debt, as they want their clients to focus on paying down the non tax deductable debt first before paying down the investment debt.
Variable Rate Investment Loans
Interest is generally tax deductible, so even though it may be subject to interest rate rises, choosing a Variable Rate Investment Loan for your investment property may be a good option, as it will give you flexibility and the ability to maximise your property’s profitability. Variable Rate Investment Loans frequently come with features like the ability to make extra repayments, and redraw facilities.
Fixed Rate Investment Loans
If you are investing on a tight budget, a Fixed Interest Investment Rate Loan may be the better option for you. You will know in advance exactly what your outgoing finance costs will be and these will remain the same throughout the fixed interest period of your loan.
Using a combination of a split Fixed and Variable Rate Investment Loan could give you the best of both worlds. You can limit increases in your outgoing expenses whilst still retaining the ability to make extra repayments and redraw them when needed. This could be a big help with saving for ongoing costs like renovations and maintenance.
Remember that we are here to help you find the right investment loan to meet your personal financial circumstances and investment goals. No matter what kind of investment strategy you are planning on using, we can help you to structure your investment loans and choose the right loan products to maximise your opportunities.
Buying an existing property to rent out
Buying land and building an investment property
Buying an investment property off-the-plan