Property Investment Loans

Borrowing For an Investment Property

Owning an investment property is fast becoming a popular route to wealth generation in Australia. While some opt to buy an investment property so that they can accumulate enough funds to buy their own home, others choose investment properties as part of their retirement plans. Then there are those who move into non-residential property investments through property trusts and syndicates

Good Debt vs. Bad Debt

As investment properties are generally considered to be tax effective and assist in generating wealth, they are often considered to be 'Good Debt'. In simple terms, good debt is considered to be tax-deductable and can be used to generate an income by investing in property or shares. Bad debt on the other hand, is not tax effective and does not generate income things such as credit cards and personal loans fall into this category.

What is Negative Gearing?

When your borrowing costs exceed the income from your investment property this is referred to as Negative Gearing. Negative Gearing can offer tax benefits by allowing you to deduct your borrowing costs from your total income, provided that the investments are genuine. However, the tax benefit only comes into effect if you earn other taxable income as well.

Negative Gearing can be complex and as with any investment, there is the risk that you may make a loss. An interest rate rise will obviously mean you pay more, and if you are unable to afford the repayments, you could be forced to sell your investment property in a hurry and make a loss in the process. Find out how much your repayments will be if interest rates rise by talking to an experienced mortgage broker.

More Information on Negative Gearing

If you would like more information on Negative Gearing or to talk to a mortgage broker about investment loan options that are in your best interest, call us on 13 LOAN (or +61 2 90188417 for international callers) or email us the form on this page and we will return your contact within 2 business hours.


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Investment Loans

Whether it is part of a retirement plan, to make use of equity in your existing home or to take advantage of tax savings there is a wide range of investment loans available to cater for such requirements. Following is an overview of some of the options that may be available to you.

Home Loans - Variable Rate - Principal and Interest

You may consider variable rate home loans for your investment property as long as it is a residential property. Minimum repayments need to be met each month and are set for an agreed term which is now usually 30 years. Extra repayments can be made and then redrawn at a later stage.

Home Loans - Variable Rate - Interest Only

As the name suggests, with an Interest only variable rate loan, you are only required to pay the interest each month (usually on the last business day of the month). This interest only payments will lapse after a pre-determined period (usually 5 years), and your loan will convert to a normal principal and interest loan for the remaining term. Extra repayments and redraw are usually not a feature of this type of loan. Variable rate interest only loans must be secured by residential property.

Home Loans - Fixed Rate - Principal & Interest

As with variable rate loans, you may also consider most fixed rate loans for your investment property. Minimum repayments need to be met each month and are set for an agreed term which is now usually 30 years. Extra repayments usually cannot be made and redraw is not available. Fixed rate principal and interest home loans must be secured by residential property.

Home Loans - Fixed Rate - Interest Only - Annually in Advance

The term of these fixed rate loans is also usually 1 to 5 years and interest is paid on drawdown and then annually, on the anniversary of the loan. In most cases, the facility must be secured by residential property, but some lenders allow a certain percentage of the security to be ASX listed shares or even commercial property.

Home Loans - Fixed Rate - Interest Only - Monthly in Arrears

The term of these fixed rate loans is usually 1 to 5 years and interest only repayments are made monthly from a designated operating account. In most cases, the facility must be secured by residential property, but some lenders allow a certain percentage of the security to be ASX listed shares or even commercial property.

Line Of Credit

Line of credit loans or Equity lines are a variable rate product with a predetermined limit. The lender assigns you this limit secured against a residential property and when you need cash you draw against that limit, usually by writing a cheque or using a special debit card. These funds can then be used to finance other properties. With most lenders, as long as you remain within the designated limit, there are no set repayments. It is usually recommended that you pay the interest amount each month as a minimum.

More information on Investment Loans

If you would like more information on investment loans that are in your best interest, call us on 13 LOAN (or +61 2 90188417 for international callers) or email us the form on this page and we will return your contact within 2 business hours.


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More information or help

For confidential assistance with your home loan or to talk to your local mortgage broker, call us at any time on 13LOAN or call our direct line on +61 2 9018 8417.

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