Investment Property Loans
Are you looking to invest in a property? At Hunter Galloway, we can help you maximize your borrowing power and make sure that you attain your investment goals as fast as possible.
To begin with, it is important to keep in mind that the terms of approval for investment loans is relatively complicated compared to other loans. This is the case because investment loans are considered higher risk, relative to regular home loans. As a result, you need to be in a pretty strong financial position in order to qualify. At Hunter Galloway, we have summarized some of the main criteria for being able to qualify for an investment loan:
- You should be able to prove that you have between 5 and 10% in savings
- Your credit score should be above average
- You should be able to prove that you have been employed in a stable job for a period of time
- If you decide to borrow more than 90%, you should have equity in other properties
Although these are general guidelines of what to expect, if you want to know what is required of you personally, it’s best to contact one of our brokers at Hunter Galloway for more information.
Investment Loan Borrowing Capacity
Are you looking for ways to increase your borrowing power? There are certain things you might be able to do to ensure that you can borrow more as part of your investment and equity loan. Take a look:
- Reducing the limits on your credit card(s)
- Applying for the loan with your partner/spouse so that both of your incomes can be considered
- Targeting lenders that have favorable criteria for clients applying for investor loans
- Fixing your interest rate for a period of time (three to five years)
Banks differ in the terms that they use to evaluate investment loan applications. Depending on the criteria required, your situation may differ, leading your borrowing capacity to increase or decrease. If you are interested in finding out a way to increase your borrowing capacity relative to your situation, feel free to contact Hunter Galloway for advice.
Bank Requirements For Investment Property Loans
Do banks have requirements regarding the type of property that I am investing in?
Yes, some banks do. However, these criteria also depend on the bank. Generally speaking, we believe these are some points to go by:
- The property must be greater than 50 m2 in living area
- It must be in a high demand area, i.e. a town that has more than 10,000 people
- It must be in a good condition
- The property type must be a standard house, apartment unit or land and construction
Overall, while this entire process may seem complicated, the investment loan is an excellent option for individuals who are interested in making a particular investment. However, you should keep in mind that borrowing 95% for an investment property is mostly considered suitable for high earning individuals who are in a very strong financial position. In addition, it is important to have substantial knowledge about property investment and experience building a property investment portfolio.
Take a look at some of the advantages of investing in property:
- Secure investment
Property investors are known for experiencing fixed returns on their investments, generally with very little risk involved.
- Tax reductions
Spending money on this property (e.g. through rates, insurance or maintenance) may be subject to tax deductions.
- Constant returns
By renting out your property, you will have constant returns in the form of rent. This will effectively mean that the property will ‘pay itself off.’
- Asset base
Having an asset base is excellent because it acts as a guarantee for when you are looking to apply for additional finance.
Investment property loans can be complicated, but if you know the ins and outs of the process, you can get a lot out of them. For more information on how to get investment loans to work for you, contact our team at Hunter Galloway at 1300 088 065.
Frequently Asked Questions
Why should you consider property investment?
One of the reasons why people favour property as an investment is because it is a tangible asset that you can see. It’s not just numbers on a screen. Reliability and predictability in terms of long-term capital growth and rental return are some of the reasons why property is favoured.
For those within a high tax bracket, leveraging the benefits of negative gearing is also a favourable part of investing.
What’s the difference between an investment loan and an ordinary home loan?
The fundamentals of an ordinary loan and an investment loan are more or less the same. However, an investment loan has a slightly higher rate than the normal loan and that’s more or less the only difference. You are offered the same options and features between the two, which means that they cross over well.
How much deposit do I need for an investment loan?
It depends on the situation and whether you’ve got equity which we can leverage. Cash requirement is about a 10% deposit plus stamp duty. If you’ve owned an investment property before – you might not need a deposit because we can use your equity, however, this is a case by case basis so speak to the team at Hunter Galloway.
Why should I choose Hunter Galloway for investment loans?
Hunter Galloway specialise in assisting investors. Having worked with many investors, we are able to cross pollinate best practices of investors and share that with our customers to ensure they get the best set up and maximise tax deductibility. We also set clients up for success to continue to build their portfolio in the future,