How to get your first investment loan
There’s no doubt about it – investing in property is one of the best ways to increase your wealth and set yourself up for the future. With the right property and financing, your assets will appreciate in value while returning a profitable yield from rental income. And since property value is not reliant on the unpredictable ups and downs of the stock market, it provides you with some much-needed stability and helps you to diversify your investment portfolio.
But buying your first investment property can be overwhelming. There are plenty of pitfalls that can trip up the inexperienced investor.
See also: Advantages and disadvantages of investing
The good news is you don’t have to do it alone.
Hunter Galloway has helped dozens of first time property investors just like you. Our experienced team of brokers know investment finance inside and out. We do the hard work of comparing loans and finance structures across multiple loan types and over 20 different lenders. This means that you don’t have to lose sleep over wondering whether you got the best rate, or if you’ve overextended yourself and put your hard-earns savings at risk through an uninformed financing decision.
It’s important to start your property investment on the right foot. By organising your property portfolio with the right loan, you will be able maximise your borrowing capacity and made every one of your hard-earned dollars work hard for you.
When we help our clients to invest, we cover all of the bases. By looking at negative gearing, capital gains tax, depreciation, offset accounts and other factors, we will make sure that you choose the right loan for your circumstances.
FAQs for Property Investors
Will I qualify for a loan?
The approval criteria for investment loans can get quite complicated, especially if you need to take into account negative gearing benefits or other factors to prove that you can afford the loan. Banks consider investment loans to be a higher risk than standard home loan, so you will need to be in a strong financial position to qualify.
Here are the basic lending criteria:
- 5-10% of the property value in genuine savings
- A good credit history, with an above average credit score
- Stable employment
Which lenders can help?
There are a range of bank and non-bank lenders that can help you with financing your investment. Each of these lenders have different qualifying criteria, so without knowing your individual circumstances it is hard to make a recommendation. The best way to ensure that you’re getting the best deal for your investment is to engage the services of a qualified independent broker.
How do I increase my borrowing capacity?
There are several different strategies you can use to maximise your borrowing capacity and finance your investments. Here are a few simple tips:
- Apply with a lender that has favourable lending criteria for investors
- Apply for loans jointly with a spouse so that your total household income can be taken into account
- Buy positively geared investment properties
- Reduce your credit card limits
Do all lenders use the same criteria?
Banks and other lenders will assess your investment loan based on different criteria. You will often find that your borrowing capacity varies (sometimes quite substantially) depending on the lender that you choose. Here are some ways that lending criteria can differ:
- Rental income – most banks will only take into account 80% of your rental income, whereas others will consider up to 100%
- Other income – lenders will differ in the way that they treat other income like overtime, bonuses, commission, allowances, dividends, trust distributions and self employed income
- Assessment rate – Most banks will add up to 2% of the current rate when assessing your borrowing capacity. Some lenders will waive this if you are fixing your rate for more than 3 years.
- Negative gearing – not every lender takes negative gearing benefits into account
With so many different criteria across lenders, it is hard to know which lender to go to for your loan. Luckily, Hunter Galloway has the knowledge and experience to find the right lender and get your loan approved. If you’d like to maximise your borrowing capacity then call us or book a free assessment.
“My mortgage was not your typical simple loan; it required a lot of attention and out of the box thinking. All of this was provided by the team. Both Nathan and Josh worked tirelessly to get the result and outcome that I needed. They are incredibly personable, professional and a joy to work with.”
“These gentlemen came recommended and I was genuinely impressed; the personalized service and very rapid reply to queries and constant updates was impressive as well as the ease with which they performed all the necessary work. They are very thorough and whilst collating paperwork is never much fun, they make it easy and explain why having all in place first is the best method. Very impressed!”
“Thank you so much to Nathan, Josh, Jared and the team for everything that they did for us in the process of buying our first house. They truly made it a seamless process. The team were always so on top of everything and kept us in the loop every step of the way. We will recommend Hunter Galloway to everyone we know! Thanks again boys!”
“We had a really great experience with Nathan from Hunter Galloway. Would definitely recommend him to anyone who is looking for a finance broker. He certainly knows his stuff, and his constant communication during the loan approval process was incredible.”
“I would recommend Nathan team to everyone. They are very professional and efficient. I previously had unpleasant experience when dealt with bank directly. Lucky, found Nathan, Josh and Jared just on time. Through them, bank even offered the loan more than I need. I could not settle this investment without Nathan's help! ”
“After being stuffed around for over two weeks by another broker - got in touch with Nathan and had a first-home loan approval within 48 hours of speaking with him. First-class customer service and demonstrated wealth of experience. Can't recommend Hunter Galloway enough.”
“Could not recommend this service highly enough! Nathan and his team went above and beyond to ensure our loan was approved and ready in time- constantly keeping us updated and reassured throughout the whole process and getting the best rate possible for us. Absolutely amazing customer service and we really can't thank them enough for helping us achieve our family home and taking all the stress out of getting a loan!”