Do you need a home loan for investment property?
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 getting an investment property. 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
Say for instance, you purchase a property for $800,000. You then sold it for $1,200,000, and your interest repayments and costs were $200,000 – your gross capital gain would be $200,000. Obviously, you are relying on the property value increasing to make your profit.
The second is through building equity
Again if you purchase a property for $800,000 and borrowed $600,000, you initially have $200,000 equity. If after a number of years your property is now valued at $1,200,000, your equity is now $600,000. You can use this equity for further property purchases. Helping you and your family have financial security in the future.
It is important to find out which way will suit your personal circumstances and give you the greatest return.
Your financial goals
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 because finding the right investment home loan for your individual needs is so important.
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.