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.
Property investment is often seen as being less risky than other forms of investment. Some of the advantages include:
Investment in property can be less volatile than shares or other high risk investment products
You earn consistent rental income if the property is tenanted
If your property increases in value, you will benefit from a capital gain when you sell
You can offset most of the property expenses against rental income, including interest on any loan used to buy the property
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.
If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.
Yes, With an interest only loan your monthly repayment consists of only the interest for the loan, and not the loan amount itself, for set period of time. Interest only loans are popular for investors because they’re often counting on the value of the home increasing enough to sell the property, pay off the loan and make a profit.
Principal and Interest loans- With a principal and interest loan, you’re paying interest, plus a part of the total loan amount each month. At the beginning of the loan, most of your repayment will go toward paying interest and a little will go toward the loan amount. As the principal amount gets lower, so does the interest you need to pay on it, so eventually, most of your monthly repayment will be going towards the principal, while a little goes to interest.
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