Investment property loans

Start with the money for the purchase

The deposit is only part of what you'll need. There are purchase costs to allow for, and you may want cash left over for repairs or a period without tenants. I'll help separate those amounts before comparing the borrowing.

You may be using savings, equity in a property you already own, or both. Equity is the property's value less the debt secured against it. Accessing some of it means borrowing more, subject to valuation and lender assessment. It isn't a withdrawal from savings. The equity guide explains how that extra borrowing works.

Then look at the borrowing as a whole

If you already have a home loan, the investment loan sits alongside it. I'll look at the proposed lending together with your existing commitments, including any extra borrowing for the deposit.

The rent can form part of the income a lender assesses, but it won't necessarily all count. Lenders also consider your other income, spending, debts and property expenses. I'll compare suitable lenders using your circumstances, then explain what needs to be verified.

Understand what you would be paying each month

Once the proposed borrowing is clearer, we can compare the repayments and loan features. The budget also needs to allow for rates, insurance, maintenance and any property-management or strata fees. Rent may fall short, and those costs continue between tenants.

Principal-and-interest repayments gradually pay down the loan. Interest-only repayments don't reduce the principal during that period. When it ends, repayments can rise substantially because the debt must be repaid over the remaining term. I'll show you both stages when comparing an interest-only option.

Before choosing the ownership and borrowing arrangements, speak with your accountant or registered tax agent about tax treatment.

From a borrowing plan to an application

I'll explain the suitable loan options, costs and information needed for assessment. If you decide to proceed, I'll prepare the application and manage the lender follow-up through to settlement. You can see the stages in how the home loan process works.

If you're moving out and keeping your current home as a rental, the move needs planning too. The buying your next home guide explains purchase timing and funding between homes.