Finding out how much you can borrow can give you a foundation for your target price range to help find properties within your budget, but securing a loan for a rental property can be a little bit more difficult than a personal home loan. This is where a mortgage broker can be a valuable asset, putting your best foot forward can make a huge difference in the type of property you can invest in. Lenders tend to look at assets and liabilities you currently have (existing property for example), what you can afford to repay, and the rental return on investment.
With Loan to Value Ratio (LVR) restrictions, when buying a residential investment property, you will need at least a 35% deposit (As of January 1st, 2018). Your LVR is how much a bank lends against mortgaged property, compared to the value of that property. LVR restrictions have loosened in 2018 with the new government, so keeping up-to-date with lending criteria is essential. A mortgage broker can also be an essential help when giving advice on loan options that are suitable for your personal lifestyle, these options can include:
- Line of credit: using the equity from an existing property towards a deposit for an investment property
- Interest-only: paying off only the interest for a set amount of time
Investment loans are otherwise no different to standard home loans, so understanding and comparing rates, features, fees and additional charges are essential.
PFSL offers an umbrella of services such as mortgage brokers, insurance, accounting and tax services, and property managers all under one roof to keep the whole process as smooth as possible.