Different lenders have different lending policy. By choosing the right lender, we can help you maximize the interest only period and minimize the amount of your deposits.
An investment loan is more complicated than a standard home loan. In order to apply for an investment loan, you need to have a stable employment, at least 5 per cent genuine savings and good credit history.Which type of property is acceptable?
- The banks only accept some specific types of property, such as standard house, townhouse, unit, land and construction. The property must also be in good condition and the area must be at least 50 square meters.
- Reduce your credit card limit; find the right property or fix the interest rate will help to increase your borrowing power. However, choosing the right lender is the first thing to be concerned. Most lenders will assess your based salary as the same way but they may have different ways to assess your overtime income, commission and rental income. These elements are really important as they decide whether you pass or fail the servicing level.
- Most investors would like to make extra repayments in order to lower the interest charged and finalize the loan quicker. In case you may need to get the fund back to purchase another investment property or for your personal use, some lenders offer the redraw facility which allows you to cash out the extra funds.
- However, an investment offset would work better than a redraw facility. Most investors purchase investment property for tax deductible purpose, offset account would be a better solution. An investment offset account works exactly same to a home loan offset account.
- When you use the property for owner occupied purpose, there is not much different between using the redraw facility and offset account but if you use it for investment purpose, offset account will give you more benefits for tax purposes.
- In Australia, maximum interest only term is 15 years. However, not many lenders offer 15 years interest only. In stead, they offer 5 years interest only and you can extend after the interest only term completes.
- Most investors choose to go with interest only repayment to minimize the monthly cash outflow and have some surplus funds to use for their lifestyle or to purchase another investment property.