If you're buying an investment property and visit a handful of brokers or lenders to see what's on offer, you may well receive different treatment each time. Investment loans are categorized in a variety of ways: some lenders class them within their standard home loan categories, while others regard them as entirely separate.
Unlike owner – occupiers, investors are usually precluded from borrowing over 97% of the property's value, and must have some form of deposit, whether it be cash or equity in another investment. Whether you're taking out a specific investor loan or a standard home loan designed for investors, features such as a line of credit or offset can really come in handy.
Positives of the Investor Loan:
Dependant on your investment strategy, an interest – only loan can help you maximize your tax deductions, simply because you are making a sizable dent on your interest repayments – for an investor these are of course tax deductible. Lenders are now offering a range of bells and whistles to investors such as portability.
- Ideal for anyone purchasing a property that they don't intend to live in. (investor loans once carried higher interest rates, but this is changing);
- Several properties can be combined together for the serious investor, who would benefit from salary crediting features like offset.
- Investor loans are now typically similar to owner-occupied loans with similar interest rates, flexibilities and options.
