5 Advantages of An Investment Loan

 

Investing in property necessitates a proper strategy. Apart from knowing your financial condition, you must possess the discipline to think of methods to enhance your earnings over time. Strategizing mostly begins with selecting the best investment home loan or the best online home loans in Australia to help in financing your target property. During your hunt for the most lucrative deal, you must look beyond the interest rates of the home-loan products. Several home-loan schemes may offer lower interest rates. However, they won’t provide sufficient flexibility for you to play your cards according to your wish. 

 

The loan features help you in various ways. A few will help you to control your finances while others help you shave time off your mortgage. However, the best features are those that can minimize the cost of the loan significantly, ultimately helping you save hundreds, even thousands, annually. 

 

In this article, we’ve identified some of the best features of an investment loan and how they can help you: 

 

  1. Repayment Holiday 

 

Investors mostly rely on rental income to cover most of their mortgage repayments. But there are instances when properties are left unoccupied and so can’t supply you with a steady stream of money to help you repay the monthly dues. 

 

In such instances, a repayment holiday helps. When your home loan has this feature, you can take a break from repaying for a specific period, which is normally up to a year. 

Similarly, a lender will only let you temporarily pause your monthly payments if you have made extra or advance payments for a buffer. You may arrange this with your lender and check their terms. 

 

  1. Interest-Only Payments 

 

An interest-only home loan allows borrowers to just pay the interest for a specific period, usually from five to 10 years. The principal amount of the loan remains intact for the loan term. 

Apart from paying lower monthly repayments, investors can also be benefitted from tax claims by taking out an interest-only loan, especially if they rent out their properties. 

This will be effective if you have any other personal debt you would like to concentrate on, provided that such is not tax-deductible. The additional amount you can save from interest-only payments can also be utilized for other investment ventures which may support you to grow your portfolio. 

 

  1. Ability to Choose Repayment Frequency 

 

To manage your finances effectively, you must ensure that your payments are organized most conveniently. 

 

An essential feature that is often ignored not just by investors, but by homebuyers usually. It’s the ability to opt for the frequency of repayments. Once you own an investment property, it should sync your repayment schedule with how frequently you receive rental payments from your tenants. When your tenants pay weekly rent, then your repayment for your home loan should be on a weekly term too. 

 

This wouldn’t help much in the short term, but it can add up and help you save on your home loan. 

 

  1. Line-of-Credit Facility 

 

A home loan with a line-of-credit facility lets you access a pre-decided amount of credit. So, you can borrow additional money whenever you wish to without applying for another loan. 

Usually, the amount you borrow is protected against the equity you have in your property. When you meet your lender's rules, you can take out a loan against a specific proportion of the equity you have built-in your home. The purpose of the loan can be for anything, such as holidays, renovations, or even a vehicle purchase. The positive aspect of this loan feature is that you will pay interest only on the amount you have already used. 

 

  1. Minimal Home-Loan Fees 

 

While investing you should be bothered about every cost you need to pay. You have to save as much as you can to optimise whatever you earn from your investment portfolio. So, you must get home loans that have minimal fees. These home loans will let you pay your costs directly, relieving you from all worries about other costs throughout your loan. 

 

When seeking loans, list all the costs linked with the product and negotiate with your lender. Seek clarifications about the ones that have to be paid upfront and the ones to be waived. 

If possible, prefer investment loans without application fees. Usually, lenders have this type of investment loan as part of a promotion or a packaged home loan. Ask your lender about the availability of these investment loans. 

 

Inference 

 

Even if you need commercial property loans in Australia, investment loans are the safest bait. They are more advantageous compared to any other type of loan. 

Location: Australia

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