If you’re a first-time property investor, researching to find the best investment loan can be overwhelming. Lenders have different policies and criteria in place, and investment property loans have different features that separate them. Although some may seem appealing, you need to be able to identify which is best suited to you and your financial position.
A mortgage broker for investment loans can help you make this process a bit easier. They will explain and compare all the different investment loan options out there and indicate those that could help you achieve your investment property goals, for example, by using the equity in your home to finance a new property.
Mortgage brokers have relationships with lending institutions and have the inside scoop on the products available . They can also describe the different loan products that can be used strategically to make your property investment journey easier.
A good mortgage broker does more than just provide the options and compare them. They’ll cultivate a relationship with you and guide you in expanding your investment property portfolio over many years.
Why a Specialised Mortgage Broker for Investment Property Is Better
Whenever you’re buying a property, hiring a mortgage broker can be extremely beneficial. They will assist in acquiring the most suitable option and savings for their borrowers by identifying home loans.
An investment property mortgage broker is more specialised and will focus on getting you the right product to maximise the highest return on your investment. These professionals understand the costs involved in an investment property loan. They have the expertise to calculate the expenses involved and establish your borrowing power, too. Plus, they’ll then help you apply for an investment mortgage that suits your budget and ensure your application is the best that it can be.
In the end, these experts will help you create a property strategy so that you don’t just stop at one investment property purchase, ensuring your return on investment helps you grow your portfolio overall.
Get the Right Investment Loan For YOU
An investment mortgage broker will critically consider your current financial situation in order to identify a suitable loan for your personal circumstances. A home loan isn’t one-size-fits-all, and buyers without brokers can easily make costly mistakes.
While you may fare well-attempting property investment on your own in the short term, an investment mortgage broker knows how the decisions you make now will affect the future. They will remind you to consider flexibility, as your life will change in the next few decades and you might require your loan to have the flexibility to keep up.
A fixed or variable interest rate will influence this. A broker will be able to advise you whether the stability of a fixed mortgage will benefit you, or whether the loan products and features of a variable rate could be required. A variable interest rate allows you the choice of an offset account or redraw facility, into which you can make additional repayments to help you pay off your loan faster.
The cheapest loan product isn’t necessarily always the best option to choose. People may be quick to secure a mortgage without understanding the consequences, just because they perceive it to be a good deal on the surface.
For example, you may jump at the prospect of a low-interest rate and apply for the loan, but later end up paying much more because you chose a variable home loan and the interest just keeps increasing. A mortgage broker may have advised locking in that low percentage with fixed interest rates.
Mortgage brokers are also aware of all the upfront fees and costs such as stamp duty, ongoing fees such as lenders mortgage insurance, and discharge fees that can be involved in a home loan. Keeping these in mind will ensure you don’t bite off more than you can chew and be put in a position where you can’t pay what you’re required to.
Investment Properties Can Be Negatively or Positively Geared
Most novice property investors think that a positive cashflow property is the best option. But, there are pros and cons to consider that an experienced mortgage broker can advise on.
Positive gearing is when the income you receive from your property investment exceeds your expenses, such as interest and deductions. While this can be appealing, a mortgage broker will advise you that going this route means you could be subject to additional tax.
Negative gearing for property investment is when the costs involved, such as interest, bank charges, maintenance and repairs, and depreciation, are more than the income it produces. Essentially, your investment is making a paper loss. But you may be able to claim tax benefits in this case.
Using Home Equity For Investment Properties
First-time investors may not know about home equity and how owning their own home can assist them in buying their first investment property.
A home equity loan lets you borrow against the equity in your home while you live in it. Your house is then used as security on your home loan.
These home loans can be easier to qualify for because lenders have proof that you have serviced the home loan for your current property well. And, they can help you begin your property investment sooner because you don’t need to save up as much money for a deposit.
If you’re investing in property for the first time, it’s best to seek advice from experienced professionals. In most cases, the services of mortgage brokers are completely free, and they can be extremely beneficial.
The best mortgage brokers will tailor an investment strategy that’s unique to you and your individual circumstances and goals. They’ll explain all the different products available and provide reasons why they could be a great fit for your needs.
If you’re an investment home buyer looking for qualified property investment advisers that can help you reach your financial goals, contact The Mortgage Agency today and get connected with a professional. Alternatively, check out this expert roundup that we featured in, offering our advice on how a mortgage broker can help you achieve your investment goals.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.