Not sure where to start with investing in real estate?
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Investment loans are becoming increasingly complex with ever-changing government and bank policies.
At Ensure Finance, we will guide you through the red tape and find the right loan to suit your financial needs.
Considerations when buying investment property:
Loan structure
Interest only or principal & interest? Fixed or variable? The most suitable choice depends on your financial goals and cash flow circumstance.
An interest only payment structure requires you to make interest payments on the loan, whereas a principal & interest structure will reduce the amount you owe to the bank and build equity in the property.
Fixed vs Variable
This is a question that many investors ask. The answer to this question depends on each individual’s strategy.
A fixed rate provides you with the assurance of a guaranteed repayment over the fixed term, whereas a variable rate provides you with the flexibility of an offset account and the ability to make extra payments.
Borrowing capacity
The projected rental income will be considered by the bank in calculating your borrowing capacity, however they will consider only a portion (eg. 80%) to mitigate the risk of market fluctuation and periods when you have no tenants.
You may also have other loans to service and expenses such as land tax or renovations. We will work with you within your circumstances and help you determine a comfortable borrowing limit.
Risk
What level of risk are you willing to accept? Investment property owners often choose to use their owner-occupied property as security for the new mortgage, but there are other options that you could consider. We will talk you through the risks and advantages.
