Low interest rates, booming property market, properties appreciating in value- are all some of the reasons why many look at investing in a property. To fund such investment, the simplest way is to sign up for a loan for investment property. Investing in a property has many perks such as a higher rate of return over a period of time or tax incentives or be it consistent rent returns from the property.
Investment home loans function much the same way as owner occupied home loans, in that lenders will lend a certain amount to a borrower, an interest rate (which will be either variable or fixed) will be applied, and borrowers will be expected to pay off the principal and interest in regular installments over the life of the loan. But investment loans are treated a bit differently for example it has higher interest rate when compared to other residential home loans and required more deposit. Talk to our brokers to understand the details.
Catering to the need / situation of property investors, there are many types of investment property loans e.g. interest only loan, principal and interest loan etc. Picking up your investment property, having the right loan / interest rate on your side can help you have greater savings.
At Sure Finance, our goal is to help you reach your investment goals by helping you choose the right investment property loan and cutting down on the jargon / terminology associated with securing a loan. This will make your loan decision process seamless and pleasant. Through our experience, we also will be sharing some tips along the way, on saving costs. We do this by accessing all our tools, available options, and calculators to help you pick the best suited loan.
What is LVR?
Loan To Value Ratio (LVR)- Loan to Value Ratio (LVR) is the amount you are borrowing against the value of the property represented as a percentage. For example, if you are borrowing $450,000 for a $500,000 property that means your LVR is 90% of the property value. The higher the LVR, the higher the risk to the lender. Typically, first home buyers can borrow up to 95% of the property value (Based on eligibility criterias)
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI)- Lenders Mortgage Insurance is an insurance that protects the lender in the worst-case scenario where you default on your home loan. LMI is typically applicable when borrowing more than 80% of the property value. LMI fees go up the higher your LVR is.
What is Genuine Savings Genuine Savings is basically funds that you have saved over time. In general, most lenders require that at least 5% of your deposit come from genuine savings when you are applying for a loan greater than 90% of the property value / LVR.
