Investment Loans
There are many options when it comes to financing your investment property, so getting sound advice in this area as it can make a big difference.
When buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart but from the head. You are buying the property because you expect it to appreciate in value and give you a financial return.
Interest on an investment property loan may be tax deductible, so your Investment property loan might have Interest Only payments rather than Principal and Interest like your home loan.
Structuring your loan correctly is critical and this should be done with the help of an experienced mortgage broker. Avoid mixing up investment property loans with your home loan. There can be significant fines from the ATO.
Whether to go fixed rate loan or a variable rate loan will depend on your circumstances, but consider both options carefully before you decide.
When investing, we will consider the right type of loan structure for you including:
- Interest Only
- Interest in Advance
- Line of Credit
- Limited Recourse Borrowing (SMSF)
- Fixed rates
- Variable rates
Construction
When it comes to construction loans Australian home owners have plenty of choice – but it′s worth knowing what they are and what to look for.
When making the decision to build your dream property, you are also making the decision to opt for a different loan structure. A construction loan most commonly has a progressive drawn-down. That is, you draw down the loan (or increase your borrowing) as needed to pay for the construction progress payments.
Once a construction loan has been approved and the construction of the property is underway, lenders will make progress payments throughout the stages of construction. Generally, the payments will be made at upon completion of five stages:
(1) Slab down/base,
(2) Frame stage,
(3) Lockup,
(4) Fitout/fixing and
(5) Completion.
A construction loan will usually be interest-only over the first 12 months and then revert to a standard principal and interest loan when the house has been completed. The amount you can borrow will be in part based on the value of the property upon completion of the construction. As the loan is being progressively drawn down interest and repayments will only be charged/calculated on the funds used. For example, if by the third progressive payment only $150,000 has been drawn down on a $300,000 loan, interest would only be charged on $150,000.
Building a home is not without its headaches – financial and otherwise. Getting the right loan structure in place, though, will help to reduce the severity.
Get the right advice from our qualified and experienced mortgage professionals at Summit Financial Strategies.
