Investment Home loans
Specialist in Investment Home Loans
Investment property loans play a crucial role in helping individuals achieve their financial goals in real estate investment. Whether your goal is to acquire residential or commercial properties for rental income or capital appreciation, obtaining the right loan is essential. At IGR Mortgage Solutions, we understand the unique complexities and requirements of investment property finance. Our dedication is to provide expert guidance and support, empowering you to confidently navigate this competitive market.
How do investment property loans work?
Investment property loans operate similarly to other types of loans, involving the borrowing of a certain amount of money that must be repaid along with interest through regular, typically monthly, instalments. These loans are specifically designed for acquiring or refinancing investment properties, or when the property serving as collateral for the loan (the mortgaged property) is utilized for investment purposes.
A standard mortgage typically spans 30 years, and if the initial five years involve interest-only payments, the lender has only 25 years remaining to recoup the original loan principal. Consequently, the principal and interest repayments over the ensuing 25 years are higher than they would have been with consistent principal and interest payments over the full 30-year period.
For an investment property loan, the deposit can be funded through cash savings, or the equity in an existing property can be utilized to offer additional security, enabling the borrower to access a higher loan amount. In certain cases where equity from another property is employed, the borrower might secure 100% of the investment property purchase price, including associated costs like stamp duty.
When acquiring an investment property, the actual or anticipated rental income can be considered as income on the loan application. However, lenders typically factor in a conservative estimate of rental income to account for potential short-term tenant vacancies and various costs associated with owning and maintaining the investment property, such as agent fees, body corporate fees, council rates, and maintenance expenses.
Ongoing payments for rent, board, or home loans related to one’s primary residence are considered as expenses in the loan application. If living rent-free with parents or family/friends, most lenders may still include a nominal allowance for rent/board.
For accounting purposes, investment property loans are typically kept in separate loan accounts from other home loans. This separation is crucial because taxation treatment varies for investment property loans compared to loans for one’s primary residence.