Investment Home Loan

What is an investment home loan?

An investment home loan, also known as an investment property loan, is a type of loan designed specifically for purchasing a property with the intention of flipping it or generating rental income. They are often used to buy properties such as residential homes, apartments, or commercial buildings that the borrower intends to rent out to tenants, flip, or hold for investment purposes.

Investment home loan vs owner occupied home loan: what’s the difference?

The main difference between an investment home loan and an owner occupied home loan is the purpose of the property you intend to purchase.

Borrowers who intend to live in their purchased property will typically need an owner occupied home loan. However, borrowers wishing to purchase a property to generate rental income or to flip it, will usually need an investment home loan.

Other differences between the two loan types include:

• Tax implications
• Lending criteria
• Interest rates
• Deposit requirements
• Loan terms and conditions

If you’re unsure what type of home loan you need or need some friendly advice, Oceania Finance is here to help. With extensive industry knowledge, our mortgage brokers will provide accurate and up-to-date advice tailored to your individual circumstances. Speak to our mortgage experts today.

How do investment home loans work?

Investment home loans work similarly to regular home loans but are specifically tailored for purchasing properties intended for investment purposes. With an investment home loan, lenders will assess the borrower’s:

• Financial situation
• Credit history
• Income
• Existing debts

They will also assess the property’s potential income-generating capability.

Investment home loans can be a valuable tool for individuals seeking to generate passive income or build wealth through real estate investments. However, like any financial decision, it’s essential to carefully consider your financial situation, market conditions, and risks before pursuing an investment loan. Consulting with a mortgage specialist, like our team at Oceania Finance, can provide further guidance tailored to your circumstances.

At Oceania Finance, whether you’re ready to invest or just testing the waters, our experienced mortgage brokers are here to help. We can take a detailed look at your individual circumstances to provide you with the best advice for your situation.

Contact us today for more information on how we can help you reach your property goals!

Investment home loan rates

Generally, investment home loans can come with either a fixed interest rate or a variable interest rate.

Fixed rates remain constant throughout the loan term, offering stability in repayments but might start higher than variable rates.

Variable rates can change based on market conditions and might initially offer lower rates but come with the risk of potential rate increases.

Interest rates for investment home loans may be slightly higher compared to loans for primary residences due to the increased risk associated with investment properties.

Why are investment home loans more expensive?

Because lenders do view investment properties as higher risk, higher perceived risk often translates into higher interest rates, larger down payment requirements, and stricter lending criteria for investment home loans.

One of the main reasons lenders view investment properties as higher risk is because they are often used as rental properties. If the property is vacant or if tenants fail to pay rent, the borrower might struggle to make mortgage payments, increasing the risk of default.

If you are concerned about the higher interest rates associated with an investment home loan, contact our mortgage brokers today. We have access to a wide range of lenders and are highly experienced at negotiating terms to get our clients the most competitive rates.

Should I use a mortgage broker for an investment property?

Using a mortgage broker for an investment property can offer several advantages, but whether it’s the right choice for you depends on your individual circumstances and preferences. Here are some factors to consider when deciding whether to use a mortgage broker for your investment property:

Access to Multiple Lenders:

Mortgage brokers have access to various lenders and loan products. They can help you compare options from multiple financial institutions, potentially saving you time and effort in searching for the best loan for your investment property.

Expertise and Guidance:

Brokers are knowledgeable about the lending market and can offer expert advice tailored to your specific situation. They can explain different loan products, interest rates, terms, and help you understand the pros and cons of each option.

Negotiating Power:

Experienced mortgage brokers often have established relationships with lenders. They may negotiate on your behalf to secure favourable terms or better interest rates for your investment property loan.

Saves Time and Effort:

Brokers handle a significant portion of the paperwork and administrative tasks involved in securing a loan, which can save you time and simplify the loan application process.

Customised Solutions:

A mortgage broker can assess your financial situation, investment goals, and preferences to offer personalised loan options that align with your needs.

Why choose Oceania Finance?

Purchasing an investment property can be a stressful and complicated experience for any borrower. At Oceania Finance, our team of local experts work to simplify the process so you can stress less. With access to a wide range of lenders, we’ll do the research to make sure you get the right deal for your circumstances. Contact us today to speak with one of our friendly mortgage brokers.