What do you need to consider for a property investment loan?

Securing finance for an investment property requires thorough research and careful consideration. Before deciding on your property finance there are 5 key considerations.

Determine your investment goals

For example, do you want to maximise your cash flow and tax deductions in the short term? If so, then an interest-only loan could be your best option. But if you want to maximise your long-term capital growth, then a principal and interest loan may be your best option.

Research interest rates

Your interest rates on an investment property loan are tax-deductible, but it still makes sense to choose the lowest interest rate for the type of investment property loan that suits your investment property goals. You should also consider whether to take out a loan with a fixed interest rate or a variable rate.

Identify any loan fees

Investment property loan fees are also tax-deductible, but once again it makes sense to choose the lowest fees for the type of investment property loan that suits your needs. The comparison interest rate reflects most loan fees as well as the interest rate, so use that rate in your decision-making.

Consider the repayments you can afford

Interest-only loans will have lower repayments than principal and interest or equity loans for the same borrowed amount. But don’t forget that you can use the rental income that your investment property generates to help you make your loan repayments.

Understand the loan features

Some investment property loans come with additional features like offset accounts or redraw facilities. You need to consider whether you need these features or not, as there are likely to be fees associated with them. 

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