If you’re thinking about growing a property portfolio, chances are you’re looking for answers to the following questions…
1. What am I hoping to achieve by buying investment property?
Are you looking for predominately strong rental returns or is your main focus on long term capital growth? Knowing why you want to buy investment property will make it easier to find a suitable property. If you don’t know what you’re hoping to achieve, it can be hard to narrow down your choices.
2. What is the difference between a stand-alone and a cross collateralised structure?
Cross collateralisation is a strategy used by lenders to tie up more of your security than they actually need.
A cross collateralised loan is when one loan is secured by multiple properties and is generally structured this way to benefit the lender, whereas a stand alone loan structure is when one loan is secured by one property only. A stand-alone loan structure can provide greater flexibility and sometimes allow you to purchase additional properties, by spreading your lending across different lenders.
You can find a detailed analysis of the pros and cons of each loan structure here.
3. I have multiple investment loans but I don’t know if they are ‘stand-alone.’ Will this affect my ability to purchase an investment property?
Unless you made a point of requesting ‘stand alone loans’ from your current lender, chances are your loans may be cross collateralised. Lenders like to tie up more security than they actually need which can sometimes limit your options.
As well as helping you purchase an investment property, we can perform a review of your existing loans to ensure your loan structure can help you achieve your investment goals.
4. My current lender offers investment loans, can’t I just ask them directly for help?
Yes, you could. The benefit in talking to MO’R MORTAGE OPTIONS is that we deal with lots of different lenders every day. We know which lenders are good at offering investments loans and which ones aren’t.
With constant changes to the lending environment, there’s never been greater disparity between what individual lenders are offering to property investors. Knowing what loan options are available and which lender to turn to, could be the difference between securing the investment property you want and missing out.
5. Aren’t all investment loans the same?
No! Many different types of loans can be used to assist with the purchase an investment property. Equity Loan, Line of Credit, Cross Guarantee, Fixed Loan, Variable Loan, Interest Only with Offset account, Construction Loan… Do you know which one is right one for you?
Making sure you have the right loan for your specific situation is critical to maximising your investment returns. And that’s what it’s all about, right!?
6. What does a lender look for when assessing a loan application for an investment purchase?
The main thing a lender looks at is your capacity to repay the investment loan. In making their assessment, they will consider your employment, current income, existing liabilities and living expenses. They may also consider your age, reliance on rental income (if you already own rental properties), the specifics of the purchase property (are you purchasing off-the-plan?), as well as other things specific to your personal situation.
By presenting your loan application in the right way to the right lender, we can help make the process as smooth as possible for you. Your loan application will then have the best chance of being approved quickly.
7. How much can I borrow to purchase an investment property?
Your maximum borrowing capacity is based on how much cash (or equity) you have accumulated and how much income you receive. Each lender has differences when it comes to calculating borrowing capacity – particularly when it comes to investment loans – meaning that one lender may allow you to borrow significantly more than another.
We’ll perform all the calculations for you and let you how much you can borrow, so you can seriously start looking for your next investment property to purchase.
8. How much do I need to save to purchase an investment property?
If you own an existing property and have built up equity, you might not need to contribute any cash savings at all. A stand alone equity loan secured by your existing property could provide the additional funds you need to complete your purchase. We can help determine whether this is an option for you.
This is by no means an exhaustive list! It’s just some of the questions we’re most frequently asked from clients looking to start (and grow) their investment property. If you are looking for more information specifically for property investors, you can find our FREE e-book here. Alternatively, call (02) 6286 6501 to chat about your personal situation.
