There’s a lot to consider when you look at purchasing an investment property, such as how to choose the best investment loan that meets your needs and goals. A good investment loan can make property investment a much smoother process. At we will work with you and your financial/tax advisors to ensure that the investment loan you choose is the right one to suit your purposes
Investment loans vary depending on what you are looking to achieve, and can be either very simple (like your standard home loan), or something more complex that helps you make effective use of tax, gearing and repayments. You can also make good use of loan features such as redraw, offset and additional repayments to help manage your investment loan.
Investor borrowers are the most sought after customer by banks and lenders due to their equity position and borrowing history. It is important that you use this position to secure the right loan for your finance needs at the most competitive offer.
To assess your requirements and to negotiate a competitive deal, contact us at .
Interest only fixed and variable rate home loans
Interest only loans are a good choice for investors who are focused on achieving capital growth in the short-medium term, and often go hand-in-hand with negative gearing. These types of loans will usually have lower repayments than a principal and interest loan.
A fixed rate interest only home loan usually has a term of 1 to 5 years, after which you will need to renegotiate the fixed interest only term or convert to a variable rate interest loan.
A variable rate interest only loan works in a similar manner but with the interest required varying with market interest rate fluctuations. It’s important to note that a variable rate interest only loan may not have the same breadth of features that are available as one where principal and interest repayments are required.
Interest in advance
Paying interest in advance is the option to pay the interest that will accumulate on your loan over the next year before it is actually charged. This allows you to claim the costs against your tax a year earlier than you would normally be able to. Usually available on fixed rate loans, lenders may offer a discount on the interest rate if you do pay in advance. The loan term may range from one-to-five years, depending on your lender.
Paying interest in advance is only an option for those who are able to afford to pay the loan interest in a lump sum.
- Plan your retirement on your own terms
- Choose an asset class that suits your lifestyle and investment objectives
- Gear into property by borrowing within a Self Managed Super Fund
Self Managed Superannuation Fund or SMSF Loans
Self-Managed Superannuation Fund loans or SMSF loans can be used to purchase property including residential and commercial property.
You may be able to borrow money to purchase property using a SMSF. Any property purchased using a SMSF loan works in the same way as any other investment property loan.
With a SMSF loan you can:
Because your SMSF is responsible for financing your retirement, your fund will need to have an investment strategy in place. Any property investments your fund makes should be in line with your overall SMSF goals.
While your SMSF can purchase both residential and commercial property, it’s essential that you plan carefully before investing. Remember, as mentioned above, any purchase needs to be consistent with your funds investment strategy.
Legally, real property purchased by your SMSF will be owned by the Property Trustee. Your SMSF will be the beneficial owner, which means the SMSF receives any income derived from the real estate.
The SMSF’s property can be treated in the same way as any other investment property. With regard for the conditions of the SMSF loan, the property can be leased, renovated or sold as the SMSF sees fit.
Because the property is beneficially owned by your SMSF, any rental or lease income will go directly to the Self Managed Super Fund. Similarly, loan repayments are made directly from the SMSF.
SMSF loans can be restructured at any time, although naturally this is subject to the loan terms. Remember, it’s your SMSF, and not you, that is repaying the SMSF loan. Once the loan is repaid, your SMSF becomes the owner of the property.
If there is a default on SMSF loan, the SMSF’s lender can only claim on the property involved – lenders cannot claim on any of the funds other assets.
Your SMSF can only buy property from a party that has no relation to you. Your SMSF cannot, for example, purchase property from yourself.
SMSF Loans are relatively new, and have attracted interest from investors and lenders alike. Recently, there’s been significant upsurge in brokers riding on investor interest. Take the time to find and speak to an experienced professional with a good track record.
- Establish or review your SMSF
- Establish the Property Trust Deed
- Instructions to Solicitors/Conveyancers
- Obtain loan approval
- Contracts exchanged
- Loan documents issued
More about the SMSF Loan Process
When you talk to us at
you can feel safe knowing that the SMSF loans available from a panel of lenders are compared against your finance needs and future plans to find the best option for your finance needs.
SMSF loan terms and features, including interest rates, loan to value ratios on residential or commercial securities and the loan term and amount, will vary widely between lenders.
As a general rule these are the steps taken to secure your SMSF loan
Choosing the right home loan can be a harrowing and difficult process, No Fuss Home Loans produced a slick and efficient solution to my fiscal needs in a very short time frame. The quality of the advice was excellent and transparent and favoured my situation as opposed to gaining the maximum return for No Fuss. I was so impressed that I have referred Kathy at every opportunity to friends and colleagues in need of advice. The most important factor for me was the after sales service where Kathy went above and beyond to secure the facets of the deal offered at the start. I always felt I was in capable hands who genuinely took my business seriously, a very admirable trait.Rob Helliwell
I have known Kathy since she was highly recommended to me six years ago. As soon as I met her I knew Kathy was a professional of exceptional integrity. Someone I could rely on and trust absolutely. Her warm and relaxed manner immediately gave me confidence that I was in good hands. Since then Kathy has become a valued adviser. She has negotiated several home loans for me. Always smoothly, without delay and for me, totally stress free. I look forward to my continued association with Kathy knowing that I can always rely on her advice and that it will be in my best interests. I would recommend her without exception to anyone who wants a professional of this quality.Jenny Atkins