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Property has historically delivered relatively positive returns for investors because house prices mostly continue to increase over the long term. Property investors can also benefit from regular rent returns and make effective use of tax.
There are a few differences between investment property loans and loans for owner-occupiers. Often investment property loans carry a higher interest rate because they could be perceived as riskier. If you already own a property, you may also be able to access equity to go toward the deposit.
Investment loans vary depending on what you’re looking to achieve, and can be either very simple (like your standard home loan), or something more complex that helps you to manage tax and repayments.
Two options that may particularly appeal to property investors are the Line of Credit loan, and the opportunity to make interest-only repayments.
Your Loan Market adviser will look at your financial goals, crunch the numbers to determine your borrowing power, and discuss different loan structures for your personal situation.
Some investors choose interest-only loans for their investment properties, meaning their repayments only cover the interest component of the loan. During this time, the principal isn’t being paid down. These are generally only available for a set timeframe after which the loan will convert to principal and interest.
Something to keep in mind is that interest-only loans often come with higher interest rates and will cost more over the life of the loan as the principal, which the interest is calculated from, does not decrease for a set period of time. They can, however, be a way to maximise tax deductions or temporarily reduce expenses.
There are many strategies property investors can choose. The right one for you will depend on your goals and circumstances – including whether or not you are carrying existing personal debt in the form of an owner-occupier mortgage or personal loans and other debt (generally speaking, it’s better to pay off personal debt first, minimising investment debt as much as possible).
One of the main factors to consider is how long you are planning on having the property, how much capital you are willing to put down and whether you need rent to cover your outgoings.
Your Loan Market adviser will help you get an investment finance package tailored to your personal investment position and strategy. Always seek advice from your accountant on investment and taxation rules for your particular situation prior to making a decision on investment methods.
Your Loan Market adviser can crunch the numbers for you to determine your borrowing power and what your repayments could look like. An adviser on your side can help set up your investment property for success.
Let us know what your goals are and we will connect you with a Loan Market adviser directly.
Find out how much you may be able to borrow to purchase property.
How much could you save by making additional repayments toward your mortgage?
No two loans are the same and there are a number of costs to weigh up. Compare two side by side to see the difference.
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Company Number: 4313118 | NZ Financial Services Group Limited (FSP286965)
The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
*Your adviser may charge a fee to cover additional time required by their team. Any fees will be discussed with you in advance so you can make an informed decision before proceeding with your application.
