Investment Property Home Loan
Investing in property can be challenging and exciting all at once. But with the right help and information, you’ll find yourself on the right track.
Negative gearing is when the costs of owning a property (such as interest charges, maintenance and property management costs) exceed the income it produces.
With financial and tax advice, and the right property, negative gearing may be a tax-efficient investment strategy for some investors.
Do your research and set your investment strategy
It’s important to do your research and understand the goals and strategies behind successful property investment. Think about things like:
- Why you want to invest in property and what are you trying to achieve?
- Will owing an investment property impact your overall lifestyle and meet your needs?
- Speak to a professional financial advisor, accountant and tax specialist.
Investment home loans often offer flexible features and benefits, allowing investors to manage their payments to try and maximise their investment income. However, because investing in property is often more financially risky than simply owning your own home, investment home loans often have higher interest rates and fees than owner-occupier home loans.
How do I apply for an investment home loan?
Just like an owner-occupier, if you’re applying for a mortgage as an investor you’ll need to provide details of:
- The value of the property you want to buy
- How much you want to borrow
- Your credit history (especially your history of making regular repayments on any other outstanding loans)
- Your income and employment status
The lender will use this information to work out if you can comfortably afford the loan. The lender will only consider your current household income when making its calculations, even if you plan to supplement this with rental yields from the property. This is to help reduce the risk that you’ll default on your repayments if the property is unoccupied for some reason, such as during fallow months when you’re changing over tenants.
The lender will also consider the potential for your property to rise in value over time, as well as vacancy rates in your area and any trends in property prices.