Investing in Property FAQs

Smart property investment can offer a steady ongoing income and/or the potential for capital growth. Traditionally, property investment is considered a good long-term investment strategy.

Is Property Investment Easier if I Already Own Property?

If you have equity in any existing property, for example your family home or another investment property, you may be able to use this to increase how much you can borrow and more quickly build a substantial property portfolio. Ultimately it will depend on your personal financial situation and investment goals.

What Costs Are Associated With Purchasing an Investment Property?

When buying investment property, there are other costs in addition to the purchase price of the property that you will need to consider. These may include:

  • Building and pest inspections
  • Survey report
  • Strata inspection report
  • Loan application fee
  • Disbursements
  • Lenders Mortgage Insurance
  • Refinancing or switching fees

Your mortgage broker can assist you to determine what additional costs will apply to your situation.

Do I Need a Lot of Flexibility in My Investment Property Loan?

Flexibility in your investment property loan can take many forms, including the ability to make extra repayments, to redraw on your loan, split your loan between a fixed and variable interest rate or even transfer the loan between properties. Some options may be standard and some may cost you money, so you need to be clear about your investment strategy before choosing a suitable investment property loan. Always compare loans with similar features when looking for the right investment loan for your situation, and beware of choosing a loan with costly features you are unlikely to use.

How Will a Mortgage Broker Help?

A good mortgage broker will assist you to find the investment property loan package that is most suitable to achieving your investment goals, working closely with your accountant and/or financial planner. With access to investment property loans from a large range of banks and lenders, your mortgage broker may be able to save you time and money.

How Can I Pay My Investment Property Loan Off Faster?

If your investment strategy calls for you to pay out your investment property loan quickly, there are a number of approaches you can take, including:

  • Dividing your minimum monthly repayment into two and paying this amount fortnightly, or dividing by four and paying weekly; this effectively increases the amount your repay every month
  • Making both consistent and ad-hoc additional repayments
  • Maintaining a higher repayment amount if interest rates fall

Interest-Only Repayment Options on Investment Property Loans

Interest-only loans suit investors who are focused on achieving capital growth in the short to medium term, and often go hand-in-hand with negative gearing. Interest-only loans will have lower repayments than a principal and interest loan and may be available as a fixed rate or a variable rate loan product. Interest-only loans may work to reduce your total outgoings and improve your cash flow.

Paying Interest in Advance

Paying interest in advance on your investment property loan works by paying the interest you will accrue over the next 12 months in one lump sum 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. Generally available on fixed rate investment loans, you may also benefit from a discount if you pay the interest in advance.