Investment Property Loans
Loans for investment property require more than just the lowest interest rate and because of the way the ATO might treat the related investment property expenses, including interest, the rate just isn’t the key ingredient.
Sure, we do investment property mortgages and it goes without saying they will be at the lowest rate possible but I want to let you in on a couple of secrets that most investors (usually first-timers or newbies) forget. Keep reading…
Investment Property Loans
Loans for investment property require more than just the lowest interest rate and because of the way the ATO might treat the related investment property expenses, including interest, the rate just isn’t the key ingredient.
Sure, we do investment property mortgages and it goes without saying they will be at the lowest rate possible but I want to let you in on a couple of secrets that most investors (usually first-timers or newbies) forget. Keep reading…
Investment Property Loans
Investment Property Loans
By the time most investors are getting into investing, they usually have a chunk of debt on their personal balance sheet – mortgage, car loan, personal loan, credit card, etc, – and all of a sudden, borrowing for a second property becomes that much more difficult. Why? Because investors run out of income to service the loan.
It’s not that in cash terms they can’t afford to service the lending, it’s that the bank calculators say ‘no’. This is because the offered rate of the loan is ‘loaded’ with a servicing buffer, usually 3% or more. I.e. if you’re borrowing at 6%, the bank calculator stress-tests the affordability of the loan at 9%. Make sense?
So here’s the first secret – not all banks will lend you the same amount of money. We could even be talking about a disparity of lending of more than 10% between some lenders. Doesn’t sound like a big deal, but when you’re trying to get a mortgage for an investment property of $890,000 and lender A will only lend you $830,000, but lender B will lend you the full amount, it’s the difference between a deal (making money and wealth) and no deal (you lose).
Secret two is that most banks you might turn to first offer boring solutions. Considering that if you have a mortgage on your home, you should repay that as a priority, often it’s smarter to have the investment property loan on interest only so you can focus on repaying the non-tax deductible debt first. No advice given here, folks.
Some of the lenders we do a lot of business with offer mortgages for investment property and other investments at the same rate and on the same terms as they do for non-investment lending. There’s conditions to this, of course, but most people don’t even know this option exists – to their great detriment.
HOW TO GET STARTED
We are the experts in investment property loans and investment loans generally. Get in touch using the enquiry form now to discuss your ambitions, the options we have available and how our expertise can make all the difference in creating financial security and wealth for you and your family.
Trust me on this, you will need the Professional Mortgage Advice only Brokers like us can provide. Old mate at the bank probably doesn’t know what he or she is talking about.