Investment Loan

Yes. You can use the equity in your current property to help you purchase an investment property. Even if you have a mortgage on the property, you will likely have enough equity to purchase an investment property. Equity is the value of the difference between what your property is worth and what your mortgage loan is.

For example, if you have a property valued at $900,000 with a mortgage of $700,000, you have $200,000 worth of equity. You may be able to borrow up to a certain percent of the equity to use toward investing in another property. Your home equity and anticipated rental income can help you buy another investment property sooner.

Below is an example of how an equity home loan with an interest-only line of credit facility uses capitalised interest as an investment strategy: If you currently have a home loan for $300,000 and your house is worth $550,000 you will have equity of $250,000 which you can use toward the purchase of your investment property.

To avoid Lenders Mortgage Insurance (LMI) you will want to keep your Loan to Value Ratio below 80%. Therefore 80% of $550,000 equates to $440,000, less the $300,000 you currently owe leaves you with $140,000 to put toward your investment property.

A split loan facility lets you combine your home loan and investment loan under one umbrella facility. These arrangements allow for direct loan repayments to be made towards your home loan while allowing interest to capitalise on your investment loan. You can separate the non-deductible debt portion of your home loan from the deductible portion and you will receive separate loan statements for each split.

We offer loans that have no monthly fee, no package fee and no rate lock fee. You will pay a competitive fee for the application, settlement and discharge phases. There is no fee for the valuation process.

Positive gearing means that the income generated from the investment property is higher than the expenses. Negative gearing is the reverse: where the cost of ownership is higher than the income generated. However, in this situation, you will look for appreciation in the property’s value over time.

Real estate is something you can see and control, unlike the stocks traded on the world’s exchanges. And, property, can certainly be less volatile. You can earn rental income from property right away and watch its value increase over time. Most of the expenses you incur can offset the income you earn from other sources.

Investment loans usually have different terms from home loans. The interest rates may be somewhat higher and the loan terms, a bit shorter. There are many variables that you will need to consider, including whether combining many investment or commercial loans into one may be a cost-effective option.