Investment Property Loan: Loans for Investment Property
How To Source And Structure The Right Investment Property Loan When You’re A Self-Employed Business Owner…
So you can potentially save thousands in interest and fees, and grow your portfolio (and wealth) without compromising your lifestyle
Access to more lenders to get you the right finance for your situation, fast
Loans are structured to protect you, your credit rating
Specialists in helping business owners with unconventional lending circumstances
Complete done-for-you service (including paperwork)
Getting An Investment Property Loan When You’re Self-Employed Can Be Tricky. Which Of These Challenges Are Concerning You Most?
Like many self-employed business owners looking for an investment property loan, are you…
Too busy to compare dozens of loans from multiple lenders to ensure you get the right option… and wish you had a trustworthy expert to do all the legwork for you?
Worried about getting declined (and having your credit rating damaged), and wish you had someone to help you get approved fast?
Concerned your local bank or broker may not have the product options (or expertise) to help you structure your loan for maximum borrowing capacity, and flexibility?
Nervous about making expensive mistakes (like choosing the wrong loan or financial structure) that could needlessly cost you thousands in interest and set you back years financially.
And like most self-employed business owners, do you want to know how to source and structure the right property investment loan, so you can potentially save thousands in interest and fees, and grow your portfolio (and wealth) without compromising your lifestyle?
Many self-employed business owners have these same questions and concerns. That’s why we developed a no-obligation, Complimentary Consultation where you can get the information you need to get fast approval for a better property investment loan.
Investment Property Loan: Home Loan Options For Investment Property
Expanding the portfolio while earning income and paying low interest rates is the goal of every investor. Acquiring investment property in Sydney or other suitable places in Australia may be ideal.
As an example, Sydney could be an excellent opportunity due to its bustling harbour city with a cosmopolitan flair, a thriving economy, and well-developed transport systems, making it a lucrative prospect.
However, for the typical Australian investor, there are a lot of decisions ahead that some focus too much on actual property hunting. As a result, they lose sight of the loan search process until the last minute. But understanding the investment loan world is equally important.
You’ve got to find the right financing option for you. In this post, you’ll gain a better understanding of real estate investments and the different home loan options if you’re ready to acquire one. You’ll also learn how to choose the right investment home loan options for your situation and how to mitigate risks to make it a worthwhile investment.
Investing in real estate
Experts suggest that investing in residential properties such as apartments, townhouses, and detached homes can be profitable. The stability and demand for housing, combined with the potential for rental income and property appreciation, can make residential properties a good option for investors.
Commercial properties like retail spaces, office buildings, warehouses, and industrial properties also have excellent potential. They could bring in long-term leases and steady cash flow. Considering their potential for capital appreciation, too, commercial properties can yield substantial returns and diversify an investment portfolio even further.
Keep in mind that new properties offer more significant tax advantages through depreciation and are likely to require less maintenance but may come at a higher purchase price. Older properties, on the other hand, have character and potential for value-addition through renovation but may entail higher maintenance costs and potentially lower depreciation benefits.
Simply put, investment properties each come with pros and cons. To determine the best choice for you, you must consider your financial situation, risk tolerance, and long-term goals.
While selecting the right investment property is vital, choosing the appropriate financing method is equally important. After carefully weighing the advantages and disadvantages of different investment properties and evaluating your financial disposition, the next important step is to explore the available loan options.
Types of investment property loans
In Australia, self-employed individuals keen to invest into the property market have several investment home loans to consider, each with its unique pros and cons. Low-doc loans can be a popular choice. These loans are a blessing, as they require less paperwork and can offer faster approval times. However, this convenience often comes at a cost. Higher interest rates and more stringent lending conditions are common characteristics of low-doc loans.
Another option is the interest-only loan. These loans require the borrower to initially pay only the interest charges and then eventually the principal amount. This structure can offer lower initial repayments, providing valuable cash flow relief for an individual whose income might fluctuate. The potential tax benefits associated with interest only payments can also be advantageous.
However, these loans may not allow borrowers to build equity in their property during the interest-only period, and there is a risk that the borrower might face higher overall costs in the long run when they begin paying down the principal unless the value of the property increases.
Fixed-rate and variable-rate loans are also something that investors could consider. Fixed-rate loans provide a set interest rate for a specific period, offering predictability in repayments—a significant benefit for those whose income isn’t steady. On the downside, they can be inflexible. You can incur a penalty if you pay off the loan early and risk missing out on potential interest savings if rates fall.
Variable-rate loans, on the other hand, offer more flexibility and the potential to save if interest rates drop. Still, they come with the risk that increased rates could lead to higher, possibly unmanageable, repayments.
Acquiring an investment home loan as a self-employed individual
In Sydney and other areas in Australia, buying an investment property can be lucrative for self-employed individuals. It can generate passive income, and you may make enough to enjoy a financially free retirement. However, acquiring a loan with a self-employed investor status can be more challenging. Traditional lenders are often stringent with their requirements, making the application process intimidating.
Fortunately, there are loan experts who can help you secure the right loan structure for you. Ideally, the loan should be one where you have better chances of approval, increased ceiling, and fair interest rates while keeping your assets protected and your credit rating safe.
Consider the following factors before taking out an investment property loan as a self-employed individual and putting up your home or any property as collateral:
Understand your borrowing capacity
Before anything else, you need to know what you can afford. This involves carefully reviewing your income, expenses, and existing debt. Consulting a professional is crucial. They know best which lenders are more amenable to self-employed borrowers and can advise on the best products and strategies.
Keep your financial affairs in order
Clear documentation is a must! You usually have to show at least two years of financial statements, tax returns, and business records. Before applying for a loan, attempt to reduce debt and make sure you keep your repayments up to date to ensure a clean credit report.
Consider different home loan types and shop around for the right mortgage
Sourcing for the right loan may be challenging. Still, you can research independently or seek the opinion of a professional mortgage broker who can help you look for a suitable loan product and how to tailor it for your benefit. It is important to review the loan terms carefully to avoid paying more interest than necessary.
By taking the abovementioned factors into account when acquiring a loan, you can ensure that the choice you’ll make isn’t only something that fits your needs but also one that you can handle easily.
Setting up risks, mitigation, and other money-saving strategies
In taking out a loan for an investment property, unique risks are involved, so money-saving and mitigation strategies are extremely important.
For instance, lenders will allow you to use the property rental to repay the loan (typically 65%–90% of the rental income). As well as using the property rental to show that you can service the loan, either by using the existing rental or proposed rental income.
You may be able to tap into existing equity and borrow up to 105% of the value. It’s important to talk to a reliable mortgage broker for the best money-saving strategies available in your individual situation.
Some possible risks or challenges in investment property loans are variable income, documentation difficulties, property value decline, and debt service risk. For these factors, mitigation strategies are necessary.
Mitigation strategies include having substantial savings to tide the business over during lean months, choosing a loan structure with lower monthly payments but longer terms, going for a fixed-rate mortgage to lock in favourable rates, and having an accountant or a mortgage broker on board.
It is always recommended to seek professional advice, especially when it comes to legal and tax matters. However, one option you may wish to consider is using a legal structure such as a family trust or a self-managed super fund (SMSF) to hold the property.
This could potentially provide you with asset protection, legal and tax benefits. Lastly, consider taking out insurance, such as income protection insurance, to cover loan payments in case of illness or injury.
Selling your investment property
In case you are thinking about selling your investment property, there are a few things to keep in mind when preparing to do so.
Get professional help before selling your property!
The process of selling an investment property can vary from being simple to complex, and this is usually because the lender has a mortgage over the property.
In order to sell an investment property that has been secured by a loan, it is generally necessary to pay off the loan in full so that the mortgage can be discharged.
Although paying off the full amount of the loan is typically required to sell the property, there is another option if you have additional security or the ability to substitute the security.
Seeking advice from a qualified mortgage broker who will be familiar with the lenders requirements and other professionals who know the laws and regulations in each state in Australia is highly recommended.
Preparing the sale of your investment property
When it comes time to sell your investment property it’s always a good idea to speak with a professional real estate agent who knows the area well and has a good reputation, they will be able to provide recent sales data for comparable properties in your area.
Also consider selling when the market is strong to get the best possible price for your property.
Possible tax benefits
Provided that you have held your property for more than 12 months, you may be eligible for capital gains tax concessions from the Australia Taxation Office (ATO). However, as with anything related to tax, it is always advisable to seek the advice of a registered tax accountant.
If this is your first time taking out a loan for an investment property, expect to encounter numerous challenges and possible rejection. It’s especially true if you’re a self-employed individual. Consulting a mortgage broker can help remove the pain points so you may be able to secure loans for investment properties with more favourable terms.
How We Help Business Owners Get A Better Property Investment Loan
Over the past 13 years we’ve helped hundreds of self-employed business owners get a property investment loan that leverages up to 95% of their purchase, all with better interest rates, lower fees, and more flexible conditions.
The Right Loan For Your Situation
Unlike other banks and brokers that most commonly cater for wage earners (not business owners), and are restricted to selling their own or brand-approved lending products (whether they are right for you or not), we specialise in working with business owners and have access to hundreds of loan options from dozens of lenders to ensure you get the right loan for your situation.
We Help You Structure Your Loan
While other banks and brokers merely find you a loan, we look at your whole financial situation and help you structure your loans in order to set you up for the future.
We Even Do The Paperwork
Once we find the right home loan, we pre-fill all the forms to save you time and maximise your approval success. And we review everything each year to ensure you’ve always got the right home loan.
The team at Pro Options has more than 48 years of combined experience helping self-employed business owners and other indiviuals get fast approval for better finance. Here’s what some of them say about their results and experience with our team:
A Huge Thank You To Alex From Our Mortgage Options!!
A huge thank-you to Alex from Our Mortgage Options!! I came across Alex about 18 months ago when my partner and I were trying to get into the housing market as first home buyers. Thank god we found Alex and had him on board to help us with our journey. He guided us all the way from getting our pre approval to buy our land and house making everything so easy and stress free. He found us a great loan and bank, explaining everything we needed to know in plain english. He managed everything related to our bank including progress payments and inspections with his communications always prompt causing no delays. Thank-you Alex for helping us to get our first home:)
I have been working with Alex for 12 years and he has been wonderful to deal with, his knowledge and client focus have saved me thousands of dollars. Highly recommended!
Alex and his team are top notch brokers and always goes beyond the call of duty to help clients, I would recommend his service to anyone needing finance.
My Investment Refinance Journey Paid Huge Dividends!!
“As an experienced investor who has required finance for property purchases whether they be for land, units, houses or for construction both in NSW or interstate, I’m always after a better deal. Ultimately the better the deal, the more dollars I can drive back into further investments to achieve my financial freedom dreams and fund my lifestyle that includes a comfortable family home, private school fees for my children, numerous overseas trips, and stepping ever closer to leaving the rat race behind. Recently in this strange Covid-19 world, Alex at Our Mortgage Options managed to refinance my exisiting mortgages and secure me additional construction loan finance that has now paid off handsomely. I’m basically at minimum now $500 a month (or $6000 a year) better off with reduced interest rate payments meaning that the next project after this new property is built, is not that far away. The refinance journey due to financial institution compliance can sometimes be excruciatingly long and frustrating but with Alex in your corner, well worth it!!”
Alex was extremely helpful throughout our 1st home purchase. He made the process smooth and hassle free. He is well versed in his field and we would recommend his professionalism to anyone who is needing the guidance that he offered in serving us.
Great mortgage brokers. These guys will give you great advice in terms of the best home loan product. Speak to these guys before going to your bank. You won't regret it.
8 Ways We Help Business Owners
Get A Better Property Investment Loan
Comparing banks and mortgage brokers can be confusing (and time-consuming). But it’s a critical exercise because choosing the right lender can save you thousands in interest & fees, and get you more money, faster. While the wrong lender could…
- Jeopardise your dream property with long delays
- Cause you to needlessly overpay in interest and fees
- Expose your current assets to unnecessary risk
- And damage your credit rating and future finance opportunities
Here are some of the things we do differently to help you avoid these disaster scenarios and get the right property investment loan — fast:
Specialists In Small Business and Unique Lending Situations
Business owners who fall outside the rigid lending criteria of banks can find it difficult to get finance. We specialise in helping people who have unique situations including self-employed business owners and those who may have been knocked back for finance in the past.
Potentially Save Thousands With More Lending Options
While most banks and brokers are limited by their in-house or brand-approved loans (whether they are right for you or not), we analyse dozens of loan options from our vast network of lenders to help you potentially save thousands in interest and fees.
Holistic Advice To Help Maximise Borrowing Capacity
Our holistic approach considers your entire financial structure (not just your loan) to help maximise your borrowing capacity, and protect your credit rating.
Solely Serving You And Your Interests
Large lenders are naturally accountable to shareholders and corporate interests (and recommend loans accordingly). We serve you and your best interests alone.
Qualifications And Experience
Unlike a mortgage broker, who has to undertake a Diploma of Mortgage Management by law, did you know bank staff (while they may be required to undertake inhouse training) do not need to be formally qualified in finance?
Make no mistake, our team members have the formal qualifications, experience, and ongoing professional development to help business owners achieve their financial outcomes.
Regular Reviews Ensure You Always Have The Right Loan for Your Situation
When did your bank last call to tell you they could give you a better deal on your loans or savings accounts? We will proactively analyse your loan at least once a year (more often if interest rates change) to make sure you’ve always got a loan which stacks the cards in your favour.
Complete Done For You Service
We compare dozens of loans, negotiate the rate with lenders, prepare and package your application for fast approval, and manage the whole process to ensure no mistakes are made. And it won’t cost you a single cent.
Advice Specific To Your Situation
Whether you’re looking for a new home or business loan, trying to save on your existing loans, consolidating multiple loans, or simply want advice for the future, we invite you for a complimentary consultation where we will share our advice stemming from over 48 combined years of experience.
Our Six ‘A’ System To Help You
Get The Right Finance -- Fast
We take time to understand your needs and financial situation so we can source and structure the right loan to save you interest & fees while protecting your assets
We compare loans from dozens of lenders and negotiate rates, fees, and conditions on your behalf – all at no cost
We present you with several options, explain all the details, and give you our professional recommendation
We pre-fill and package your application (saving you hours of admin) for maximum approval success
We follow up to ensure everything goes smoothly (with no mistakes) right through to settlement day
We regularly review everything to ensure you can be confident you have the right loan for your situation.
Your Next Step To Get The Right Property Investment Loan – Fast
The quickest and easiest way to see how to get the right property investment loan is with a no-obligation Complimentary Consultation during which:
- You’ll get a firm idea of how much you can borrow and what it will cost in terms of interest, fees, and repayments (so you can confidently plan and even start looking at properties)
- You’ll learn how to avoid common mistakes that can lead to failed applications and corresponding credit damage (and things you need to do now to ensure your loan application is successful)
- You’ll get an overview of the different types of home loans and finance structures (and what loans are likely to give you the interest, fees and flexibility you’re looking for)
- You’ll explore ways our team can help you source and structure better property investment finance so you can potentially save thousands in interest and fees, and grow your portfolio (and wealth) without compromising your lifestyle
Please be assured this consultation is not a sales presentation in disguise. On the contrary, you will receive expert advice specific to your situation.
Naturally, we’d love to help you arrange your finance, but you can certainly take our advice and try to implement it yourself. In any case, you have nothing to lose with a no-obligation complimentary consultation.