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Property has historically delivered relatively positive returns for investors because house prices mostly continue to increase over the long term. This has made it popular as a long-term wealth-building strategy. They can also deliver regular rent returns and form part of a tax-friendly strategy.
There are a few differences between investment property loans and loans for owner occupiers. Often investment property loans carry a higher interest rate because they could be perceived as riskier. If you already own a property, you may also be able to access equity to go toward the deposit.
Some investors choose interest-only loans for their investment properties, meaning their repayments only cover the interest component of the loan. During this time, the principal isn’t being paid down. These are generally only available for a set timeframe after which the loan will convert to principal and interest.
Something to keep in mind is that interest-only loans often come with higher interest rates and will cost more over the life of the loan as the principal, which the interest is calculated from, does not decrease for a set period of time. They can, however, be a way to maximise tax deductions or temporarily reduce expenses.
There are many strategies property investors can choose. The right one for you depends on your circumstances and goals. One of the main factors to consider is how long you are planning on having the property, how much capital you are willing to put down and whether you need rent to cover your outgoings.
The total deposit you need will depend on the lender and the value of the property. You typically need a 20% deposit to avoid paying lenders mortgage insurance (LMI). It is possible to use equity you have in another property to form part of the deposit.
You can calculate how much lenders may loan you using this borrowing power calculator.
Your Loan Market broker can crunch the numbers for you to determine your borrowing power and what your repayments could look like. A broker on your side can help set up your investment property for success.
Let us know what your goals are and we will connect you with a Loan Market broker directly.
Find a broker close to you, or set up a video call at a time that suits you.
Find out how much you may be able to borrow to purchase property.
How much could you save by making additional repayments toward your mortgage?
No two loans are the same and there are a number of costs to weigh up. Compare two side by side to see the difference.
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With over 600 mortgage brokers throughout Australia, we’ve likely got someone just around the corner from you.
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Send an email to customercare@loanmarket.com.au to get in touch.
Our Customer Care team is available weekdays, 8:30 AM to 5:30 PM.
With over 650 mortgage brokers throughout Australia, we’ve likely got someone just around the corner from you.
Looking for a career change? We’re committed to working with you to achieve your goals.
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The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
*Your broker may charge a fee to cover additional time required by their team. Any fees will be discussed with you in advance so you can make an informed decision before proceeding with your application.
