A pre-approval can give you peace of mind when purchasing your investment property. You will know the maximum amount you can spend on your purchase as well as the purchasing costs such as stamp duty and your loan repayments. It will give you a chance to compare loans and decide what kind of loan you need and which features are important to you. You may want a fixed rate loan so you know what your monthly repayments will be, a low interest rate, a nil application fee or no monthly fees.
Get a health check on your existing loan
When borrowing to purchase an investment property it is recommended to look at your existing loans and make sure you are not paying too much in interest or fees. There are financial benefits to taking out an Interest Only Loan when you are buying for investment. For example, if you pay part of the Principal, that amount is not tax deductible. Instead, it has to be paid out of after tax dollars from other activities. Also, you could use this extra money as interest on a loan to buy another property and start your own property portfolio.
Finally, there is also the option of borrowing against the equity you have built up in your own home. Have you thought about using some of that as a basis for building your long term wealth?
For more information on your investment loan options contact us today.