Do you need a home loan for investment purposes?

Investment home loans are essentially the same as home loans used for owner occupied purposes – interest rates, facilities, options etc.

Investment loans can be used for property purchase, or to purchase a share portfolio (The debt needs to be secured by property).  Either way, the use of the funds determine whether a home loan is for investment or personal use. 

It is always wise to seek professional advice when making a large financial decision to ensure you are will informed on the taxation laws that may influence your decision.  Speak to your accountant or financial planner to get you well on the way to making a good investment strategy.  If you prefer to invest in property, there are two primary ways to build your wealth.

The first is through capital gain. 

If you purchase a property for $250,000.00 and sold it for $400,000.00, and your repayments and costs were $80,000.00 – your gross capital gain would be $70,000.00.  Obviously you are relying on the proerty value increasing to make your profit.

The second is through building equity. 

Again if you pruchase a property for $250,000.00 and borrowed $220,000.00 you initially have $80,000.00 equity.  If after a number of years you have reduced your debt to $150,000.00, and your property is now worth $400,000.00, your equity is $250,000.00.

It is important to find out which way will suit your personal circumstances and give you the greatest return. 

Think about your financial goals, are they long term or short term?  Do you want to pay the loan off quickly, or do you want to obtain the greatest tax benefit?

Once you have an investment strategy in place, it is now time to find a professional mortgage broker who will help you complete your investment goals by finding the right investment home loan for your individual needs. 

It would be beneficial to read the following information on ‘Types of Home Loans’ to give you an idea on which home loan will suit you.