PROPERTY INVESTMENT LOAN
Property investment loan is a mortgage solution for those who want to buy an investment property and earn rental income from it.
Property investment loans are different to the standard owner occupied loans because of their stricter eligibility requirements. Banks look for higher LVR (loan to value ratio) in investment loans, meaning investors need to raise a larger deposit to buy the property. Interest rate is also slightly higher in investment property loans in comparison to owner occupied home loans.
You can claim tax deductions on expenses that you make for your investment property which actually reduce your taxable rental income or your capital gains tax if you sell the property. The tax deductions you can claim for an investment property include:
- Interest on the investment loan
- Home and contents insurance and landlord insurance
- Real estate agent’s commission
- Maintenance costs
- Council rates
- Reduction in value of depreciating assets like air conditioners
- Advertising for tenants
- Reasonable travel expenses on property inspection
Detailed property research is a crucial part of the planning process. We can assist you with your research by providing a property report that captures key information, including:
- Property sales history
- Government valuations
- Recent comparable sales
- Suburb profile
- Comparable rents
Top Reasons to Invest in Property
- Rental income – Rent on the property provide the regular income from your investment, which assist in paying back your loan and cover up other property expenses.
- Tax benefits – Tax benefits are also an important part of investment in property whether your property is negative or positive. Any money you spend on your investment property like maintenance costs, depreciation and the interest is tax deductible against your income.
- Passive appreciation – Where the property value rises in line with the general market trends. Over the long term, investment in property has proven to be a reliable and low risk investment option.
- Active appreciation – Where you can increase your property value through either purchasing at low market value or by renovating and enhancing more overall value than the renovation cost.
- Build wealth
The equity you build in your investment property will grow over time and this will give you the opportunity to use that equity to purchase future properties.
- Setup up for your retirement
With good planning, investment properties can be a great source of reliable income, especially in your retirement.
Some important considerations while purchasing an investment property
- Property investment in Australia is a proven way to create wealth. It is a tangible asset and you can start earning income from first day of your ownership.
- As there are are several costs involved in buying an investment property, it’s better to fully understand these costs so you can accurately plan for your funding requirement.
- When you’re comparing investment properties, always keep the tenant appeal in your mind. The property should be attractive enough to the prospect and long term tenants.
- When you’ve decided on an investment strategy you’ll need to make sure you’ve selected a loan that will maximise your goals for cash-flow and capital growth.
- Once you’ve selected a loan product, a formal pre-approval is the next critical step in purchasing an investment property.
- Once the sale is finalised and you’ve taken over possession of the property you will need to find tenants and a manager for the property.
You may be able to buy a property by accessing the equity in your existing home. We can talk to you through the different options available for purchasing an investment property and help you understand the whole process.
Can we help you?
If you are looking for a property investment loan, please contact us to make an appointment for a free no obligation consultation. Contact us