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Compare investment loan rates

Compare investment loan rates and calculate mortgage repayments - Data last updated on 17 Dec 2017

Compare investment loan rates

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Investment loan rates

If you're thinking about investing in a residential property there are a number of issues that you need to consider. It's not always easy to secure a loan for that type of investment, even when interest rates are very low. It will depend on where you are considering buying, as prices will be higher in desirable areas. They can also be higher if there is a lack of inventory available, so this needs to be factored into your decisions.

What is an investment loan?

It's not much different to a regular home loan, or mortgage – it's just that you will own the property bought with such a loan but won't occupy it yourself. Many people consider it a good investment because the property is likely to appreciate in value, provided it is looked after well, and there should be a steady rental income stream. As with normal mortgages, investments loans can be agreed at a variable interest rate, a fixed rate locking you into a specific rate for a period of time, or a split rate where you can choose a mix of variable and fixed.

How does an investment loan compare to other similar products?

Investment loan rates generally work the same way as a mortgage for the property of which you are the owner-occupier, and though it may not be as cheap as a standard mortgage, it is likely to be cheaper than taking out a large bank loan or other type of loan. That doesn't mean you shouldn't shop around, because financial companies are always looking for new customers and you could secure an attractive deal. Two types of loan that investors consider attractive are:

  • Interest only - where the borrowed sum remains the same but you only make interest payments on that sum until you sell the property or at the expiry of the interest only period.
  • Line of credit - where, if you own a property, you can tap into any equity that you've built up on it to use as a deposit for the investment property that you want to buy. You could think of it as a sort of credit card that has a big limit, but the loan's security is given by the equity in your home.

Tips to make it easier to get an investment loan

Loan companies want as much security as they can get: understandable because they want their money back. Very few things in the financial world are easy, but you can do a lot to help yourself.

Try to put down a sizable down payment – the more you're able to afford as a deposit, the more likely you could be offered a lower interest rate for repayments, saving you money in the long term.

Before approaching a lender, check out your credit score – the better your credit rating is, the more likely you are to pay less interest.

Research a variety of lenders and compare their various products – you might discover some very attractive deals as companies vie for your business.

FAQs

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

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