Residential Investment Loans
Borrowing options available to investors are now very similar to loans for owner-occupier purchases.
Principal and interest variable rate home loan
Most principal and interest variable rate home loans you can access for the purchase of a principal place of residence will also be available for residential investment purchases. The same loan terms, interest rates and terms and conditions will generally apply, for example access to additional features such as extra repayments and redraw.
Interest only variable rate home loan
A variable rate interest only home loan works in a very similar manner to a fixed rate loan of the same type, although with variable rate repayments depending on movements by the Reserve Bank and your lender. Unlike variable rate principal and interest loans, an interest only loan may not have many features available (for example redraw). After the interest only period expires, usually 5 years, your loan will revert to a standard principal and interest loan.
Line of Credit
Many investors choose to use a Line of Credit to purchase investment property, due to the ability to continually draw funds back up the limit, thus allowing you to purchase additional properties without the need to apply for additional loans.
Principal and interest fixed rate home loan
Most principal and interest fixed rate home loans you can access for the purchase of a principal place of residence will also be available for residential investment purchases. The same loan terms, interest rates and terms and conditions will generally apply, for example extra repayments and redraw may be limited or unavailable.
Interest in advance
Paying interest in advance is the option to pay the interest that will accumulate on your loan over the next year before it is actually charged. This allows you to claim the costs against your tax a year earlier than you would normally be able to. Usually available on fixed rate loans, lenders may offer a discount on the interest rate if you do pay in advance. The loan term may range from 1 to 5 years, depending on your lender.
Paying interest in advance is only an option for those who are able to afford to pay the loan interest in a lump sum.
Interest only fixed rate home loan
Interest only loans suit investors who are focused on achieving capital growth, and often go hand-in-hand with negative gearing. These types of loans will usually have lower repayments than a principal and interest loan.
A fixed rate interest only home loan usually has a term of 1 to 5 years, after which you will need to renegotiate your or pay out the loan.
For more information on residential investment loans
For more information on residential investment finance or the investment loan that is in your best interest, talk to your local mortgage broker and we will return your enquiry within 2 business hours. Or call us at any time on 13 LOAN or direct on +61 2 9249 3739.
