*

When it comes to making the most of an investment property, finding the right home in the right location is only half the battle; finding the best finance is the other half. Many options are available and the choice of home loan will ultimately depend on your particular investment strategy and the type of property. Here are the three main choices.

Standard Variable or Fixed Rate Home Loan:

Depending on your circumstances, most lenders will let you borrow up to 90 per cent of the purchase price of an investment property. You may, however, be required to take out lenders mortgage insurance.  

Interest Only Home Loan:

With an interest only home loan, repayments only cover the interest component. The principal is repaid in full at the end of the loan term (usually three to five years). Because borrowers only repay the interest component, interest only loans have lower repayments than principal and interest loans.

Equity Home Loan:

If you already own or substantially own your home, you can borrow against the “equity’ you have accumulated. Equity is simply the difference between what your property is worth and what you owe. For example, if you have $200,000 to pay off on a home worth $500,000, you have $300,000 worth of equity. An equity home loan gives you a line of credit on your mortgage up to an approved amount. The loan can be taken in full or in stages, making it particularly useful for property investing.