Loans for investment property
Investing in residential property is a popular strategy to grow your wealth. Our brokers can assess and provide appropriate lending for your investment strategy, including SMSF.
Getting familiar with some financial terminology can give you a leg up on your journey.
Investment properties can generate many financial benefits for investors, particularly for those who have the patience to see through a long-term investment with a sensibly selected property. Our specialist mortgage brokers can be a key asset to your investment strategy, with the ability to provide finance solutions to maximise your investment return. We also provide finance options for Self Managed Super Fund (SMSF) investments, including refinancing.
Accessing equity to invest
The two main ways to access your equity:
- Applying for a cash out loan against an existing property to act as a deposit to use in combination with a standalone loan to purchase a new property. This would enable properties to remain separate, mitigating risk.
- Cross-collateralising properties together, leveraging equity to take out new borrowings to purchase a new property. This can be viewed as a riskier structure, but may lead to greater product discounts, with a shared equity position.
You should speak to a Bernie Lewis Home Loans Mortgage Broker about the benefits and risks, and to identify what is suitable for your situation.
Rental payments from your tenants provide the cash flow income for your property, which can be used to help meet the loan repayments and other expenses of the property, but rent is only one component of your overall investment return.
This is where the property value goes up in line with the general property market and history tells us that well located properties will on average, double in value around every 10 years.
This is where you add value to your property through either buying at below market value or by renovating and adding more overall value than the cost of the renovation.
Investment properties can be a way to facilitate tax concessions, which is one of the more popular reasons owners decide to invest. It’s important to understand how the property will be geared, and how that will affect your tax position:
Negative Gearing is where the costs of owning and managing an investment property exceeds the rental income received, with the loss claimable as a tax deduction on your taxable income..
Self-Managed Super Fund (SMSF) finance
This is a favourable option for those who want to retain flexibility when it comes to retirement superannuation, whilst still being able to choose from a variety of investments. SMSF finance opens up a wider choice of assets in which to invest, including property and direct shares. Other advantages may include the capacity to exercise control over the timing of taxable events, and some even find self-managed super funds to be more transparent and tax-efficient than other products.
Self-managed super funds have complicated tax structures to navigate, so you must make sure that you are fully committed to running them in the most effective way possible.
Appointing a skilled broker, financial adviser and tax accountant is a smart way to ensure that your fund is being arranged and managed in a way that is efficient, and in line with the law.
Thorough property research is an important part of the planning process. Prior to committing to purchasing and investment property a Bernie Lewis Home Loans Mortgage Broker can assist you with your research by providing a property report that captures key information, including:
- Property sales history
- Government valuations
- Recent comparable sales
- Suburb profile
- Comparable rents
If you would like any further information regarding the purchase of an investment property, please talk to one of our Mortgage Brokers.
Your first home loan is a journey. Wouldn't it be nice if you had an expert guide who would give you a hand in making the best decisions and avoiding the pitfalls?
Well that is exactly what Bernie Lewis Home Loans brokers do. In fact we have been doing this for decades. Best part – it doesn’t cost you anything extra. So what are you waiting for?
My partner and I were really out of our depth at the start of building a home. We visited a few banks who weren’t all that helpful, but we talked to our Mortgage Broker and she explained everything to us in a way that was easy to understand and made us feel really comfortable. She went out of her way to help make sure the process was as simple and smooth as possible. Every question I had no matter how odd was answered thoroughly. Definitely will recommend Bernie Lewis Home Loans. They actually made building a house a fun and relatively stress free experience.
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Bernie Lewis Home Loans partner with new lenders who really want to refinance SMSF loans. See if you can get out of the SMSF mortgage prison with our help!
Purchasing an investment property is a big decision and one that should not be rushed into. Getting into the property market under-prepared or too early can end up being costly and reduce your returns on the investment.
Lending terminology explained
The following is a list of terms and their meanings that you may come across when purchasing a home and arranging a home loan.
This is the person who acts on your behalf for the purchase of the property. They will attend the settlement and ensure that you get clear and unencumbered title or ownership of the property. They may also conduct various searches of the title to ensure that everything is in order as well as collect and disburse all funds in the transaction and provide you with your detailed settlement statement. A solicitor can also perform this function.
When you sign a contract to purchase a property, you then have until midnight two clear business days later to cancel the contract without penalty. Any deposit paid will be refunded in full.
A property purchased at auction does not have cooling off rights. Cooling off rights can also be waived by signing the appropriate document prepared by a solicitor. This is generally done for a property going to auction and purchased prior to the auction.
The lender who is providing the loan and therefore holds the mortgage on the property.