Lenders consider investment loans to be higher risk than owner occupier loans and can therefore have stricter lending requirements, borrowing limits and higher interest rates.
They may also have a higher LVR, which would require a higher deposit from the investor.
If you already own property, you can use equity in your existing property as a deposit on an investment loan however, you will need to pay back the deposit and the rest of the amount to buy the property.
Here are the following factors you need to consider when comparing investment property loans:
• Make sure you compare the rates, features and fees for each loan that you look at. Be sure to compare fixed and variable rates as well.
• Ensure that the loan has features that can maximise your tax benefits or maximise your cash flow. Research features like interest-only, interest in advance and 100% offset to ensure the loan fits your investment strategy.
• Compare the loan fees, which include application, valuation, legal, monthly and fees for features like offset and redraw.
• Make sure that the lender does not penalise you if you want to put extra funds towards your loan and if you want to get access to the extra funds and seek a loan with a redraw facility.
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Friday, 6 December 2019