Tips for finding the best property loan for your investment
An essential element of property investment is finding the loan that will support your investment goals. Here we look at some strategies that can be particularly beneficial for property investors.
Research a wide range of lenders
You don’t need to limit yourself to your local bank’s latest deal. Research as many lenders as possible to learn more about their loan products. A mortgage broker can simplify the search process for you, and make recommendations based on your financial situation and investment goals.
Choose the loan features that support your investment strategy
Different loan features support different strategies. If you are setting up a rental income, you will look for different features than someone looking for capital gain. Interest-only loan repayments can reduce the amount you need to spend on your investment, while an offset account can be used to save up for the next investment property. Your mortgage broker can help you work out which loan features are best for your goals, so you can find the loan right package.
Fixed or variable interest rate
A fixed rate can simplify your budget, as you won’t have fluctuating repayments as interest rises and falls. However, if you plan to sell the property, keep in mind that selling it during a fixed term can incur costs. A variable rate can give you access to 100% offset facilities. If you want to protect yourself from excessive rate rises, yet keep the advantages of a variable rate, you can opt for a split rate which combines a portion of both.
Your property will keep appreciating in value, and regular valuations gives you access to the increased equity, which you can use to expand your portfolio further. Before choosing a loan, ask if the lender will allow you to do this, as not all loan agreements permit this practice.
If you are planning to renovate and resell the latest investment purchase, you could benefit from a credit facility feature with your loan, as this will provide the funds to pay for your renovations.
Still not sure?
With so many loan options available, it can be overwhelming to figure out the right loan features for your specific needs. Speak to your mortgage broker and financial advisor to figure out which features will help you achieve your investment goals.