Interest rates move constantly, so you will need to allow room in your budget for interest rate increases and other unforeseen additional spending. When interest rates drop, maintaining the same repayments with the savings going into your offset account is one of the fastest ways of paying off more of your loan and building a buffer if they rise again.
Think very carefully about the different loan product offerings available and how these relate to your spending and saving habits. Consider options such as an offset account that will enable you to take advantage of using any excess cash to save on interest. It’s also a great account to use to save for your next investment property.
Not only can National Services Financial help first home buyers, but we can also help first time and experienced investors navigate the right path, structure and solutions to property investment.
There are many ways you can finance your first investment property, however it does depend on a few things:
– If you are purchasing the property by yourself or with another / others
– How long you plan to hold the property
– If you are going to live in the property at a later date
– If your parents are going to be involved in helping you with either your deposit or going as a guarantor are amongst a few.
The most common and typical finance for investment property is interest only loans. However as the lending environment is constantly under review, especially for investors, the criteria to borrow investment funds are subject to change.
Ideally, investment property loans should be interest only because an interest only investment loan is FULLY tax deductible. Interest only loans can be fixed or variable. It is usually the best cash flow solution when used with good capital growth. With an interest only loan your repayments are set to cover the interest component of your loan only allowing you to keep your repayments on your investment property to a minimum.
Generally, interest only loans are for a maximum five year term (depending on your lender) reverting to a principal and interest loan at the end of the agreed interest only term. However a further interest only loan can be negotiated at this time. The interest on your investment loan is tax deductible, making these types of loans attractive to investors.
As the lending landscape constantly changes interest only loans are constantly under review and not always the best option any more. Use the skills and expertise in our office to avoid any misunderstandings and to maximise your investment lending.