Borrowing for Property Investment
Borrowing for property investment can be quite daunting to first time investors.
- Should I use the equity in my home to finance my deposit?
- Can I purchase an investment even if I am not a home owner?
- How can I tell what loan is best for me and what amount I qualify for?
- How much of the purchase price will the bank lend me?
We, at Webdeal Home Loans are faced with these and other questions from property investors, each and every day. Property investment is one of the most natural activities for someone who would like to secure their financial future and independence. Australia has a second-to-none history of capital growth and rental returns. This country has created thousands of property millionaires who just as you have once upon a time were considering purchasing their first investment property. You can use the equity in your home to finance the required deposit.
However if you have not prepared yourself by creating access to the equity in your home through either a line of credit or a redraw facility, you may not be able to take the required 10% and make a deposit payment when required.
You can purchase an investment property even if you are not yet a home owner. We have many clients who decided to purchase one or several investments first before buying a home of their own. You will not qualify for a First home Owner Grant if the property you are buying is to be your investment, however if you have a clean credit history, 5% deposit should be sufficient to qualify for a great home loan. Choosing an investment loan that meets all your requirements is best to be done using the expertise of a mortgage professional. We can certainly offer a helping hand through a National Network of Mortgage specialists who are waiting to offer a helping hand with any questions that you may have in relation to home loans or investment loans.
If you do not have any deposit and would like to borrow the full purchase price of your investment including costs – this is only possible if your other property (home or another investment property) can be bundled in as additional security for the loan. If you do not own any other real-estate and you are purchasing your first investment, best case scenario of required deposit is 5%.
If you are looking to purchase an apartment somewhere in a high rise complex, or a property in a rural location – the required deposit could be substantially higher.
We strongly recommend that all purchase contracts are signed ‘subject to finance’ to ensure that in the even that you fail to qualify for the loan you require, you do not lose your deposit.
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