Investment Property

Purchasing an investment property is best way to boost your wealth,  but it also represents a big financial commitment. That’s where we come in, with a range of investment home loan options to suit your purchasing needs.

As efficiently you mange your assets and your home loans, more desirable will be your returns.

A- one loans can help you

1. Understand Negative gearing

2. Use equity on loan.

 

Negative gearing

Negative gearing occurs when the cost of owning a rental property outweighs the income it generates each year. This creates a taxable loss, which can normally be offset against other income including your wage or salary, to provide tax savings.

Equity on loan

Your home equity is the difference between your property’s market value and the balance of your mortgage. If you’ve owned your home for a few years, there’s a good chance you’ve built up some reasonable equity, and this can be a valuable resource when it comes to property investment.

Here’s how it works. Let’s say you want to buy an investment property with a market value of $400,000. There are also additional purchase costs (legal fees, stamp duty and so on) of $20,000, bringing the total cost to $420,000.

Assuming that you meet the loan approval requirements, a lender will fund 80% of the property’s market value – potentially more if you’re prepared to pay Lenders Mortgage Insurance (LMI). That is, the bank will lend you $320,000 to buy the investment property. As the total cost of the property is $420,000 you still need an additional $100,000 for the deposit and other upfront expenses. This can come from the equity in your existing home.

Investment expenses that you can claim :-

This will include interest on the loan as well as ongoing maintenance and recurrent expenses such as agent’s fees, council fees, advertising charges, insurance etc.

Australian market housing report

Get insight into the Top 20 suburbs for growth and rental yield across Australia with property valuation report from us.

Check your Investment property home loan borrowing power 

How to choose Right Property

Commercial Vs Residential

When you invest, you can choose between buying a commercial or a residential property. But both options come with their own advantages and disadvantages.

If you choose a Commercial Property

Advantages

  • Tenants are generally responsible for outgoings like rates and insurance.
  • Tenants are more likely to make improvements that will increase your property’s value.

Disadvantages

  • Commercial properties can sit untenanted for long periods, particularly in uncertain economic times.
  • Commercial properties typically have lower capital growth potential because the building (which will depreciate) takes up most of the land.

 

If you choose a Residential property

Advantages

  • Residential property is less likely to stay untenanted for long periods.
  • Residential properties have a higher land-to-building ratio than commercial, so usually offer higher capital growth because land values go up, but buildings depreciate.

Disadvantages

  • Residential properties typically deliver a lower return because you can’t charge as much rent as commercial properties.
  • You’re responsible for maintenance costs.

Loans and Finance tools

Property investing with an interest-only loan

Now that you’ve decided to invest, you’ll need to decide what type of loan to apply for. An interest-only loan can be useful to investors.

A principal and interest loan requires two amounts to be paid per agreed cycle—a payment for the contracted principal amount, and a payment for the amount of interest charged. But with an interest-only loan, you only pay the accrued interest.

Interest in advance

With an interest in advance loan, the interest is charged at the beginning of a period of time. For example, charging the first year’s interest in the first month of a loan. It’s generally only available on fixed-rate loans for investment purposes.

Interest in arrears

With an interest in arrears loan, the interest charged at the end of a period of time, usually the end of the month.

Investment

Buy your Investment property

Make an offer, contract of sale, unconditional offer, conditional offer, finalize loan.