Investment property owners have access to a variety of loans to compliment their investment strategy. Once you have found an ideal location to purchase, obtaining the right financing is key to make your investment property a profitable endeavor. Your mortgage professional will meet with you to help you best decide which loan is suitable for your investment goals.
What is Your Goal with the Investment Property?
There are 2 reasons why you purchase in investment properties. Your investment goal will Influence your decision when deciding on the proper loan.
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Negative gearing
Negative gearing is when you are trying to obtain tax advantages of owning the investment property by subtracting your non-capital expenses from your overall income. Expenses such interest from your mortgage, selective loan costs, management fees and additional non-capital maintenance expenses.
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Capital growth
Investors notice the property value increases over time and reap the tax free benefits of the capital gains on their own home.
Investors are encouraged to seek the help of a tax professional to discuss their specific tax situation and the tax benefits of purchasing a investment property.
Loans to Compliment Your Investment Goal
Depending on the lender?s requirements, you may be able to borrow up to 90% of your home?s value. Variable rate home loans come with a flexible interest rate. The lower rate comes with many advantages, but as rates change, so does your interest rate. If interest rates spike up, you can see an increase in your mortgage.
You may be able to borrow up to 90% of your home?s value depending on your current situation. Fixed rate home loans provide investors rate stability in a changing market. As interest rates jump up or down, the rate on a fixed home loan stays the same.
These loans are designed to suit investors. Interest only home loans allow investors to make minimal payments on the interest portion of the loan, instead of making repayments on interest and principal combined. While making the smaller payments, they anticipate the property will increase in value so it can be sold for a larger profit. Investors expect the value of the home to increase with the market or by renovating the space while they are making the reduced payments.
Equity home loans are for investors who already own the home. Investors are able to borrow against the equity that has grown in the home. Equity is simply the difference between what you owe and what the home is worth. If the home is worth more than the balance of the mortgage, the difference is what you can borrow.
It is important for an investor to surround themselves with a knowledgeable financial team to assist them in making the best financial decision for their business. With help from a tax professional and mortgage broker, an investor can rest assure knowing their team is helping them create the best outcome for their specific investment goals.
Source: http://www.tomorrowfinance.com.au/blog/home-loans-for-investment-properties/
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