Property Investment Loans

 

Which Loan?

 

There are many loan options to consider when investing in property. Today there are a number of lenders that are making their loans more flexible than ever for property investors.

 

Below is a list of loan options for you to consider.

 

Professional Packages

For one yearly fee you can purchase and maintain multiple loans under the one  package. This allows you to choose between variable, fixed, construction or line of credit loans all under the one package for one yearly fee.

 

This can be a significant saving if you have to pay fees for each investment property loan. Some lenders allow unlimited loan splits and the choice of any product all under the one package.

 

Loan Products with Nil Upfront or Ongoing Fees

An alternative to professional packages are your basic type home loan. Most of these loans have little of zero fees associated with the loan which is important for reducing the costs.

 

The main disadvantage is that if you require other loan products then there may be fees. So it is important to choose you lender wisely when investing in property.

 

If you are an active property investor with multiple properties then a professional package would be your best option. No establishment fees and the ability to choose multiple loan products offer the greatest flexibility and choice.

 

However, if you only have one or two investment properties then a variable or fixed rate loan may be the better alternative.

 

There are many lenders offering offering a variety of packages and loans. To help you find the best solution for your property investment requirements it would be best to contact us.

 

 

Other features to look out for

 

Low Interest Rate and Fees

Discounts are often made for those with higher loan amount. For example, for lends over $250,000 often receive a 0.7% discount off the standard variable rate. Further discounts apply for loans greater than $750,000 depending on the lender.

 

Loan costs can be the bug bare of any property owner, especially for investors who need to acquire or sell property. Establishment fees, ongoing fees and get out costs can be expensive if you have a number of properties. Therefore, it is important to structure your investment loans correctly to reduce these fees can be complex and you may need professional advice.

 

 

Flexibility

The more active you are at investing the more flexible you will need your loan. If you are buying and selling properties you will need a loan that allows you to do so with few fees and minimal paper work.

 

Depending on your investment strategy you may want a lender to allow a 100% lend if you are a high risk property investor. This will allow you borrow more when purchasing an investment property. Although this is not recommended some people like to take on more risk than others.

 

 

Taxation and simplicity

Find a property investment loan that allows splits. This is where each property has an its own account and makes it simple to keep track of each properties performance. It also significantly reduces ongoing fees and simplifies paper work

 

Each split can have its own repayment structure such as principle and interest payments or interest only payments. Also, you can choose a variable or fixed rate loan for each split.

 

Taxation calculations are made easier as you can gauge the negative or positive cash flow for each investment property. It also makes you accountant life a lot easier when it comes to calculating your tax

 

 

Reduce Mortgage Insurance Costs

If your total lending is greater than the 80% of your total property value then lenders mortgage insurance (LMI)  will need to be paid. The higher the percentage the greater the mortgage insurance cost.  It is important to structure the property portfolio correctly to save on lenders mortgage insurance. A poor structure could cost you thousands in extra costs.

 

Low Deferred Establishment Fees

If you are an active property investor and turn over properties in less than 5 years then there may be fees for paying out the loan early. Some lenders can charge up to one to two percent for discharging your mortgage early so this is a cost worth considering when choosing a lender.

 

 

Allows for Mortgage Reduction

a.     Allows you to make extra repayments without fees

b.     Offset facility to reduce the interest paid on the loan

c.      Redraw facility that allows you to access funds you have paid beyond the minimum

d.      Allows you to make extra repayments without fees

 

 

Calculation of Rental Income

When it comes to servicing a loan (your ability to pay your loan), the percentage of the rental income a lender will accept may determine the amount you can borrow for you next investment property.

 

Some lenders only account for 70% of rental income while others account for 100% of rental income. Depending on your investment strategy, choosing the right lender is important for increasing your borrowing costs.

 

 

Did you know that?

» You can have one loan account and have multiple splits for each property and only pay one fee

 

» Loans with nil or minimal upfront and ongoing fees

 

» Fixed rate loans with the flexibility of most variable loans, such as, 100% offset accounts and the ability to

    make as many repayments as you like without incurring additional costs.

 

» Interest only loans with the same flexibility as principle and interest loans

 

 

To get the right property investment loan for your circumstances request an online quote or contact us