What are the rewards of property investment?
Property, bricks and mortar, real estate. This has always been a preferred investment as it can pay for itself with cash flow from rental income, while giving you even larger profits in the longer term as the property value increases or ‘appreciates’ over time. Property investment remains the number-one investment choice for Australians, with plenty of options for a tailored loan structure and loan flexibility. It’s always worth staying up to date with Mortgage House incentives and our extensive understanding of government tax concessions and investment loan advantages.
Your interest rate on investment loans should result in profitability, long-term gains, a superior credit rating, and an asset to be proud of. At Mortgage House, we understand the sacrifices you make in expanding your real estate holdings, and we will do everything we can to make all your hard work worth it. In 10, 20 or 30 years down the track, will you wonder why your current self didn’t take the steps to invest in property? For more tips read our helpful tips checklist.
What is conditional and pre-approval and how can they help you purchase property?
Conditional approval is a confirmation from Mortgage House lenders that, on the basis that all required information provided is factually correct, you will be given loan approval subject to various conditions, and once you’ve found your desired property, a successful valuation of the property will satisfy the condition.
Pre-approval is the confirmation from Mortgage House that, now that the property you wish to purchase has been valued and we have all required information from you, provided final checks are completed successfully, you can proceed with making an offer with our financial backing.
If you want to start seriously looking for an investment property, your offer will be stronger if the loan amount has been conditionally approved. If you have found the right investment property for you and have had it expertly valued, you can be pre-approved for the home loan and the property in one go.
We can guide you through the process and compare investment loan rates to suit you in the meantime by determining your borrowing power, while also assisting with all related documentation. The loan application pre-approval process includes a credit check, with considerations that include previous loan defaults or bad credit history. You will also need to document the expected income from your investment property. Your calculations should include operating expenses, taxed and a financial buffer for maintenance. Feel free to call us today for personalised advice.
You can find out more about conditional approval and pre-approval here.
How can you make an offer?
The process for making an offer on your desired investment property depends on whether you are buying from a private seller or buying at an auction. It’s important to be aware of the difference, and you should always consult with your solicitor or conveyancer before submitting an offer.
In a private sale, you have more flexibility to negotiate the terms and leave yourself an exit strategy should complications arise, such as the house inspection revealing unexpected and expensive problems. You will also have more flexibility in obtaining financing.
Auction sales typically require a 10% or more deposit before the sale. Your decision at auction needs to be certain as the contracts are usually final and don’t have convenient escape clauses. Our experienced lenders can answer any questions you have regarding the offer and purchase process.
What type of investor loans are available
Flexibility is important when it comes to investment loans. That’s why Mortgage House offers wide-ranging home loan solutions for all customers. We have a number of variable rate and fixed rate mortgage options in our investor home loan portfolio to allow you to compare investment loan rates quickly.
With a variable rate home loan, interest repayments can increase or decrease during the loan repayment schedule, with a range of factors influencing interest rate fluctuations. Fixed rate home loans, on the other hand, allow you to lock in your chosen interest rate for an agreed period, usually between one and five years.
Mortgage House also offers split loans using both variable and fixed interest rates that could be ideal for your investment purposes. Split loans are a popular choice, allowing you to determine the ratio of the fixed and variable loan portions.
Interest-only home loans are another choice worth considering for investors. Interest-only loans are available for up to 5 years or more, with repayments only covering the interest and not the principal loan amount. In a market where prices are on the rise, your home or investment property should continue to increase in value, and ultimately turn a profit. Interest-only loans can also provide the financial buffer required to purchase the investment property you want.
Regardless of the investor home loan product you choose, you should be attempting to increase equity as well as turn a short-term profit. Investment mortgage rates should be a key consideration when you are weighing up your next purchase.
Identify growing opportunities
Property values have grown all around Australia and there are always fluctuations in local and regional markets. Identifying ‘hot-spots’ is easy, but the timing of your investment is also important, and no one can guarantee 100% certainty of making a profit. These are some of the indications that successful investors look for when choosing the best investment property in Australia:
· Suburbs and localities in the early stages of gentrification
· Increasing property values in surrounding suburbs
· High-demand areas with limited housing stock
· Rising rents in popular areas
· Local infrastructure improvements
· Accessibility upgrades between a regional area and major freeways
Mortgage House home loan experts can take an objective look at any investment property you might be interested in. We can help you evaluate a property’s profitability and then provide lending solutions with the lowest home loan investor rates to suit your needs.
How can I compare investment home loans?
There are a lot of processes involved when considering the purchase of an investment property. Finding a suitable loan product is essential, and your attention will also be diverted to studying the market, understanding your personal objectives, and making an honest appraisal of your financial situation.
With so much information requiring simultaneous understanding, it makes good sense to research your potential with the assistance of a Mortgage House investment loan adviser. We offer both fixed rate and variable rate investment home loans to maximise your opportunities. Our investment home loans are famous for low interest rates, money-saving features, flexibility and a targeted solutions-based approach, allowing you to invest with confidence.
Experiment with our mortgage calculators and comparison tools that help you appreciate the benefits of Mortgage House. Our Best Rate Mortgage Calculator, for example, lists our investment home loan options by interest rate, and you can compare up to five investment loans at a time. At Mortgage House, we help you make the complex simple, allowing you to take advantage of everything we have to offer.
What is the difference between an owner-occupied loan and an investment loan?
There are two main types of home loans – owner-occupier and investment. Owner-occupier home loans are for people intending to live in the house, whether it is already existing or a new build. Investment loans are for people who are looking to add to their property portfolio by purchasing additional real estate. Investment homes, units and townhouses are usually purchased as rental properties.
Both investment and owner-occupied loans can have similar features, fees and charges, although interest rates on investment loans may vary. This can be due to increased risk carried by investment loans, along with government incentives to promote housing affordability for owner-occupiers. Whether you purchase a home as an investment or to live in, you will have to pay Stamp Duty, which is something to consider during any mortgage calculation.
At Mortgage House we have a range of investor and owner-occupied home loans that may be suitable for your property objectives, and a key component is to understand your borrowing power. When you know how much you can borrow from your lender you can be strategic in your investment property search and save time looking for well-matched real estate. Once you have vital information in place, an accurate budget can be formed, including a clearer picture of expected long-term financial outcomes.
Fill out the information in our borrowing calculator, including information about monthly expenses, other expenses, credit card repayments and other loan repayments. The results will give you a good indication of your chances for pre-approval or investor loan approval. If the numbers aren’t what you had hoped for, contact our expert lenders and we will look for other ways to help you satisfy your investment property objectives.
Calculate cash flow for a rewarding investment
In the context of rental investment properties, understanding cash flow isn’t difficult. For example, if the money used to maintain your property is greater than the money the property generates, your investment has a negative cash flow. If income and expenses cancel out, you have zero cash flow, and if your rental property turns a profit, you have positive cash flow.
Mortgage House is here to assist with your investor home loan and turn it into positive cash flow. In an ideal investment market, positive cash flow is lucrative, and when combined with long-term appreciation of the property, the investment could become the smartest financial move you ever make. Understanding cash flow is easily calculated by finding the difference between the investment property income and expenses.
CASH FLOW = total income less total expenses
Another method of calculating cash flow over a longer time span is to calculate your annual cash flow as a percentage of total cash invested. For example, a rental property achieving an annual cash flow of $20,000 after an initial investment of $200,000 will have a 10 percent positive cash flow.
Cash flow is a handy way to verify your financial position and can also be a useful means of forecasting your future with a degree of certainty. Mortgage House offers a range of free calculators for ascertaining your true financial position for every type of real estate investment, and when you are ready to make your next move, contact us to help you make the best possible start.