Investment Loans

Are you buying an investment property?

A variety of lenders offer investment property loans but they may not all fit your specific investment goals and risk profile.

By gearing your property portfolio with the right loans you can maximise your borrowing capacity, extend your interest only periods and reduce the size of your deposits.

Free assessment

Will I qualify for a loan?

The approval criteria for investment loans is quite complicated especially if negative gearing benefits are required to prove that you can afford the loan.

Investment loans are generally a higher risk than standard home loans and, as such, you need to be in a strong financial position to qualify.

The basic lending criteria are:

• You should have 5% 10% in genuine savings .
• If you are borrowing more than 90% then some lenders like to see equity in other properties (i.e this is not your first investment property).
• A good credit history.
• An above average credit score .
• Stable employment.

If you think that you will qualify for an investment loan please call us now on 1300 889 743 to talk to a broker or enquire online and one of our mortgage brokers will contact you to discuss your options.

Which lenders can help you?

From an Australian bank s point of view, investors who tend to borrow more are considered to be higher value clients.

However, an investment loan is typically a higher risk to the bank.

For example, if you had a home loan secured by your home and an investment loan secured by your investment property, which would you pay for first if you were in financial strife?

In the event that the bank has to sell your investment property to recover your debt, they may have problems with the tenants refusing to move out or destroying the property. It is for these reasons that banks tend to have lower LVR s (lend less as a percentage of your property value) and stricter lending guidelines!

Therefore, it is important to find a bank that encourages investors, not one that has a conservative view of investment loans. We know which banks like dealing with property investors, do you?

In Australia a range of both Bank and Non-Bank lenders can consider 95% investment loans. Each lender has different qualifying criteria, so we don t recommend any lenders until we have seen your full details and assessed your capacity to borrow.

Increasing your borrowing capacity!

To increase your borrowing power, follow these simple tips:

• Apply with a lender that has favourable lending criteria for investors (see below),
• Reduce your credit card limits,
• Apply for loans jointly with your spouse so that all of your income can be used,
• Buy positively geared investment properties, or
• Fix your rate for three to five years (see below).

Banks differ in the way that they assess investment property loans. Depending on your situation, your capacity to borrow may be increased or reduced.

• Rental income: Most banks use only 80% of your rental income in their assessment but some use 100%.
• Other income: All banks assess your base salary in the same way but they differ in the way that they assess overtime, bonuses, commission, allowances, trust distributions, dividends and self employed income.
• Assessment rate: Most banks don t calculate your borrowing capacity using the actual rate that you are paying. They add up to 2% to the current rate to make sure you can afford the loan if the rate were to increase. Some lenders do not load the rate when assessing your loan or use the actual rate if it is fixed for more than 3 years!
• Existing debts: Some banks assess the repayments on your existing debts using principal and interest repayments, even if you are paying interest only! This is a major problem for investors with larger portfolios because often they cannot afford principal and interest (P I) repayments on all of their debts.
• Negative gearing: Did you know that not every lender takes negative gearing benefits into account? If your portfolio is not positively geared then find a lender who can include these benefits in a serviceability calculation.

We know which lender can approve your loan!

Be aware though that we believe in responsible borrowing and will not help you obtain an investment loan if, in our opinion, it will put you in financial difficulty.

If you would like to find out how much you can borrow from several different lenders then please call us now on 1300 889 743 to talk to a broker or enquire online and one of our mortgage brokers will contact you to discuss your options.

Apply for an investment loan today!