Property Investment Loans have very similar characteristics to home loans, however, knowing the differences can help you find the best lender for your situation.
Who will lend you the money for your investment?
In Australia, there are a number credit providers who offer competitive home loans with varying offers. Most of us know the big 4 banks (Commonwealth Bank, NAB, ANZ, and Westpac) who all provide home loans for investment. There are also a number of other lenders who provide competitive investment loans who you may not know. These include:
- RAMS
- Mortgage Choice
- Canstar
You should also consider using a mortgage broker, especially if you’re a first time investor looking for options.
What are the differences between home loans and investment loans?
All investment loans are home loans – the differences lie in the eligibility criteria on application. Investment loans have a higher LVR (loan-to-valuation ratio), which is calculated based on the borrowing amount and the value of the property being used as security on the loan.
Lower LVR scores usually require a higher deposit to lower the risk to the bank. Investors applying for above 80% LVR may require additional documentation to meet approval criteria.
Lenders have varying solutions for high and low LVR loans so it pays to ask a mortgage broker who can talk you through your options.
Are all loans for investment property the same?
There are different types of home loans that can be used for a variety of investment scenarios. The 2 most common investment loans that are attractive to investors are:
- Interest only loans – interest only loans only require the borrower to pay the interest only, meaning monthly repayments are lower.
- Line of credit loans – a line of credit loan, or equity line as it it’s sometimes called, allows you to borrow using the equity of your home as security.
Everyone has a different situation, and lenders have options to suit most, so it pays to take the first step and get informed. For more information, contact our friendly team today.