Buying a property to rent out is a popular form of investment in Australia. If you like the idea of being able to physically see and touch your investment then this might your preferred choice of investment but make sure you find a suitable home loan that’s going to meet your specific needs.
Investment loans are a type of loan available that borrowers can take out for the purposes of purchasing an investment property. Not differing significantly from other types of home loans, investment loans offer a range of options including, variable and fixed rates. Investment loans are available for most amounts to suit your budget and investment needs, however there are two types of loans that are generally more popular for investors:
Line of credit loan
With this type of loan you can tap into the equity in your existing home and use it for a deposit to purchase your investment property.
If you have built up equity you can use that to draw from an agreed fixed amount at any time to pay for other expenses, or purchase other assets. This can save you money in the long-run as home loan rates are generally much lower than credit card rates.
Interest only loan
Unlike standard home loans where you pay interest plus principal, with an interest only loan you only pay the interest. This is until you sell the property at which point you then have to pay back the total principal owing.
By only paying off the interest your monthly repayments will be less and you will also be eligible for tax deductions on the interest payments.
Compare a large range of Australian home loans with RateCity’s investment property mortgages comparison tool.