Finding the investment home loan that is right for you
Looking for the right Investment Home Loan that matches with your financial status and lifestyle? Finding the perfect loan can be difficult, especially when you aren’t getting the right professional advice.
Where you are looking for a second property for investment purposes you want to be sure that it becomes an asset and not a liability!
There are many risk involved in purchasing property, especially when you are already under an existing financial obligation. This is why it is important to ensure that you know exactly what your loan type entails, as well as the features of the loan. Comparing products from various financial institutions will ensure that you get the best deal around.
What to consider?
There are many things that you need to consider when looking for a home Loan. These include the amount you are able to borrow from the lender, the interest payable and the repayment options. These vary significantly from bank to bank so it is important that you read each lending policy carefully and accustom yourself with the lending criteria, to ensure that you get approval the first time round and minimize any risk that the loan may pose.
What do I need to qualify?
Most lenders will typical assess the risk that your loan poses, by reference to a few criteria. These include your employment stability, income, credit history and your credit score, which is calculated using specific formula which is individual to each bank.
Where you have been in a stable job for many years and are making enough to cover the loan, this will usually not be a problem. However gaps in employment history are generally questioned by the banks. Any credit issues, defaults or other late payments may also need to be thoroughly explained to the banks so that they know that this will not be a continuing pattern.
Do I need a deposit?
For investors, the mandatory 5% deposit that is required of first home buyers, does not apply. The banks will use the equity in any of your existing properties in order to secure your loan.
How much will my repayments be?
To work out your loan repayments and the cost of other loan features and fees, see the following calculators which will assist you in determining how much you will have to pay:
Different Kinds of Calculators
Repayment Calculator: this computes the monthly repayment once you have specified the amount, interest rate and the duration of the loan.
Amortization Calculator: your monthly repayments as well as the remaining balance of your loan at the end of each month will be calculated through this system. It will also indicate how much principal and interest you are paying for each repayment.
Pay Back time Calculator: this will show the time it will take to repay a loan once you have signified your monthly payment, balance and the interest rate.
Stamp Duty Calculator: this will show the amount for the stamp duty and government charges you accumulate when buying a property.
Tools to help you make your decision
The most important thing to remember is that there are people who have experience in this industry and as such, they can help you make the right decision. When discussing your situation with your property investment advisor or consultant, they will take into account your income, the amount you want to borrow and they will help you assess whether or not you will be able to afford the loan repayments. Other things to consider include the possibility of making extra repayments on the loan amount, to reduce the interest payable.
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