Investment Property Loans

Why To Get Investment Property Loans?

Despite the fact that investment property loans are not as liquid as loans obtained for the purchase of Stocks and Shares Australians have a fascination with property investment in both residential and non residential areas. The former being predominantly the family home while the latter is more concerned with capital growth and wealth creation. In 2008 $68 billion was borrowed by Australians for investment property loans.

What Do Investment Property Loans Cover?

There are costs to be covered by your investment property loan including:

  • G.S.T. on new house and land package.
  • Fees, Legal, valuation, conveyancing.
  • Real Estate commission.
  • Stamp Duty.
  • Mortgage Insurance. If your loan is more than 75% of the valuation of your property mortgage insurance is required.

This is not an exhaustive list of things for investment property loans to cover. Allow 10% on top of the purchase price to cover mandatory expenses.

Investment Property Loans Providers

All banks and a wide range of financial institutions provide funding for investment property loans, lending up to 95% of the property valuation in some cases. Length of investment property loans is negotiable. Rates of investment property loans can be fixed, variable, interest only, market linked or negatively geared.

Things to Remember About Investment Property Loans

There are number of things you should remember about investment property loans:

  • Do not take short cuts. Do your homework and research before proceeding with investment property loans.
  • You may choose to pool your resources with others who are similarly motivated and focused. Property syndicates or property trusts would meet your needs in this case.
  • Financial rewards are not guaranteed when you get an investment property loans. Property may fall not rise in value. Tenants trashing rented premises are not unknown.
  • Investment property loans are not as liquid as loans obtained for the purchase of Stocks and Shares.
  • Observe closely the level and trend in interest rates as they will have a direct bearing on the profitability of your investment.
  • Be aware of the opportunity cost: the return you could have received by placing your money in an alternative area of investment.