Tips to help you find the right investment property loan for you!

If you are going to use your hard earned money, where will you invest it? This is a question that requires a lot of careful thought and research. Business minded people may invest in the stock market, FOREX (Foreign Exchange) trading; others venture their money in traditional businesses, while there are people who will invest in expensive cars. It just depends on what your interests are and where you see a potential for growth.

Whilst those involved in the finance world may choose to invest their money in this way, most ordinary people invest in the real estate market. If you are looking for your first home, or an investment property, but not have any idea what the first steps are, then read on for some great tips.
Which property is best?

Depending on your needs, you may choose to invest in a property that you can call a home, something that will produce high yields or a property to use as a holiday home. However, this decision is largely based on the state of your finances.

When choosing an investment property, it must be something that you can afford, not something that will cause you further financial stress or cause you to default under any existing loan obligations. This is principally why it is important to speak to the right people before committing yourself to further obligations and making that decision to invest.

Who can help me?

Looking for the right home or property is only half the task, finding the right company or financial institution to help you in your property loan is the other! Most banks offer competitive investment loans and rates and where you have existing properties, you can use the equity in those properties to borrow without a deposit!

Additional features of investment loans include redraw options, offset and additional repayments. It is also important to consider positive vs negative gearing.

Positive and negative gearing

These are the terms used to describe investors acquiring a loan to invest in property. Negative gearing is where the cost of owning the investment property outweighs the actual returns received, and positive gearing is the opposite. Negative gearing is beneficial as it serves to reduce the amount of tax payable on your regular income.

Interest only repayments are also available for a period of up to five years. This means that any other money that would be paid to cover the principal, is freed up to further invest.
With so many options available, it is important that you speak to a financial consultant. Getting advice can also help make the process simpler. So what tips do you need to guide your decision? Read on to find out.

Eight factors to consider when choosing a loan

When looking for the right investment loan, it is important to consider the following points:

• Loans with low repayments
• Loans with low interest rates and fees
• Loans with no hidden charges
• A loan that is in tuned with your present financial goals
• Seek advice about the right loan for you
• Think about buying property with friends and family
• Use the equity in any existing property
• Research the location and market price of the property

Ask the right questions

It is necessary to know the advantages and disadvantages of different property loans. Ask questions and make sure that you understand fully understand the terms and conditions of the loan and the financial institutions criteria.

Planning is also very important. Making sure that you have all your finances in order will better protect you in the event of any unforeseen circumstances that may affect your ability to repay the loan amount. Speaking to the right people and getting the right advice will ensure that you make the best decision possible for your situation, to minimize the risk involved and maximize your satisfaction with your investment choice.

Are you looking to refinance your existing loan? Debt consolidation through refinancing can help to simplify your loan and roll all of your existing debts into one loan.

Additionally, refinancing can free up some extra cash that you can put towards anything your heart desires! Consequently, this is an option that many people find highly attractive.

But what if you can’t provide the banks with adequate documentation? Can you still refinance? The answer is yes! Both major and non-conforming lenders can help you refinance your existing loan through a low doc home loan.

A low doc home loan is a loan option available to those who do not meet the lending guidelines as set by most banks. They may be self-employed and are unable to prove their income, or their Business Activity Statements (BAS) don’t adequately reflect their earnings.

Luckily, a low doc loan means that minimal documentation needs to be provided. So what do the banks require?

Most major lenders will require an income declaration along with an additional document. This may be either a BAS or an accountant’s letter or a bank statement. These documents will help them assess the risk associated with lending to you.

For those that are looking for a commercial loan or a loan for business purposes, you can apply for a no doc loan or asset lend. With this loan, you do not need to supply any documentation!

This makes the application and approval process relatively easy. All you have to do is sign documentation stating that you can afford to repay the debt. Simple!

Once you have successfully refinanced, you can release equity to free up cash. This can be done by switching lenders or staying with your existing lender. If you choose to switch lenders, as they may offer better rates, than you will need to complete a discharge authority.

Your new lender will request that this is completed and signed by your existing lender, before the ‘cash out’ will be released.

Since these loans are not conventional, it is best to speak to a broker! They can ensure that the application process goes as smoothly as possible and can make sure you get approval!