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Investment Property Home Loan
Property Investment Loans
Investing in property can be a smart long-term wealth strategy-butchoosing the right investment loan can make a big difference to your cashflow, borrowing power and flexibility. At Mortgage Counsel, we help Australianscompare lenders and structures to find an investment property loan that suitsyour goals (first investment, upgrading your portfolio, or refinancing).
What is an investment loan?
An investment loan (also called an investment property home loan) is a mortgage used to buy a property you plan to rent out orhold for capital growth, rather than live in as your primary home.
Because lenders view investment lending as slightly higher riskthan owner-occupied lending,
investment loan interest rates, policies, and deposit requirementscan be different.
Why are they different?
• Income Assessment: Lenders often take thepotential rental income of the new property into account when calculating your borrowingpower.
• Tax Considerations: Many investors structurethese loans to take advantage of tax benefits, such as negative gearing (where loaninterest and costs exceed rental income, potentially reducing taxable income).
• Repayment Flexibility: Investors oftenprefer Interest-Only repayments for a set period to minimize monthly outgoingsand maximize tax-deductible debt.
Why Choose Mortgage Counsel for your Investment Loan?
• Structure Matters: We don't just find youa loan; we help structure it correctly (e.g., using offset accounts or splittingloans) to protect your assets and maximize tax effectiveness.
• Access to Multiple Lenders: We comparehundreds of products from Australia's leading banks and non-bank lenders.
• Long-Term Strategy: We look at your portfolioas a whole, ensuring your finance setup allows you to keep growing.
FAQ`s
Generally, lenders prefer a deposit of 20% of the property'svalue (an LVR of 80%). However, it is possible to buy with a smaller deposit(often as low as 10% or even 5%), though this usually incurs Lenders MortgageInsurance (LMI). LMI is a one-off fee that protects the lender, not you, butpaying it can sometimes be a strategic move to enter the market sooner.
Yes, this is a very common strategy! If you have built up "equity"in your own home (the difference between what your home is worth and what you owe),you can often use that equity as a deposit for your investment property. This canallow you to buy a rental property without needing to save a cash deposit from scratch.
This depends on your strategy.
• Interest-Only:Lower monthly repayments because you are only paying the interest, not thedebt itself. This improves cash flow and is popular among investors seeking taxdeductions.
• Principal and Interest: You pay off the loan balance over time. The interest rate isusually lower than interest-only loans, and you build equity faster.
Negative gearing occurs when the costs of owning the property(loan interest, repairs, council rates) are higher than the rental income youreceive. In Australia, investors can often claim this "expense" againsttheir other taxable income (like their salary) to reduce their overall tax bill.Note: We always recommend speaking to a qualified accountant regarding tax advice.
Typically, yes. Lenders perceive investment loans as slightlyhigher risk than owner-occupier loans, so the variable and fixed rates are oftenmarginally higher. However, by working with a broker at Mortgage Counsel, we can shop around to find you the most competitive rate in the market.
Residential investment loans are for houses and units. If youwish to buy a shop, office, or warehouse, you will need a Commercial Loan. Commercialloans have different terms (often shorter loan periods and lower LVRs). We can assistyou with both residential and commercial financing.
You are responsible for the mortgage repayments regardless of whether the property is tenanted. It is crucial to have a financial buffer (savings) to cover themortgage during periods of vacancy or unexpected maintenance.
