Investment Loans

Residential Property Investment loans

If you’re ready to seek out financing for your residential investment loans property, these five tips can improve your chances of success.

Have a sizeable down payment
Mortgage insurance won’t cover investment properties, so you need at least 20% to secure traditional financing for them. If you can amass 25%, you may qualify for an even better interest rate.If you don’t have the down payment, you can try to obtain a second mortgage on the property, but it’s likely to be an uphill battle.
Be a ‘strong borrower’
Although many factors — among them the loan-to-value ratio and the policies of the lender you’re dealing with — can influence the terms of a loan on an investment property, investors should check their credit score before attempting a deal. It will have the greatest impact on a loan’s terms.In addition, reserves in the bank to pay for all your expenses, personal and investment-related, for at least six months also have become part of the lending equation.
Shy away from big banks
If your down payment isn’t quite as big as it should be or if you have other extenuating circumstances, consider going to a neighborhood bank for financing rather than large, nationwide financial institutions.Smaller institutions are going to have a little more flexibility. They may also know the local market better and have more interest in investing locally. Mortgage brokers are another good option because they have access to a wide range of loan products, but do some research before settling on one.Recommendations from friends also are a good way to vet lenders, and investors shouldn’t be afraid to inquire about their credentials, and then verify them.

“What is their background?”
“Do they have a university degree?”
“Do they belong to any professional organisations?”

Ask for owner financing
A request for owner financing is used to make sellers suspicious of potential buyers, because almost anyone could qualify for a bank loan. But these days, it’s become more acceptable due to the credit crunch and the number of motivated sellers who want to get rid of their properties.
Think outside the box
If you’re looking at a good property with a high chance of profit, consider securing a down payment or renovation money through home equity lines of credit, from credit cards or even from some life insurance policies. As always, research your investment thoroughly before turning to these riskier sources of cash.

Be aware that you may be met with some scepticism, especially if you don’t have a long history of successful real estate investments. Some peer-to-peer groups also require your credit history to meet certain criteria.

Commercial Property Investment Loans

We offer expert funding for apartment loans, office, hotel, industrial or retail property loans. Our service-oriented brokers give you the underwriting expertise required by today’s tougher lending standards. Whether you are a seasoned investor or new to the market, we’re here help you explore your best options for commercial financing.

Interest-Only Repayments

Most investors choose an investment home loan with the option to make interest only repayments. This is because it is more convenient to calculate your overheads such as repayments and income, as well as the expectant short-term ownership of an investment compared to an owner-occupier. Interest only repayments are exactly that: you only pay the interest each time you make a repayment and therefore you never reduce the principle or the loan balance. Some owner-occupier mortgagees choose to make interest only repayments if they are in a tight financial position but because the balance does not reduce the loan term may become extended which means you will pay more interest.

Principal and Interest Repayments

Your home investment loans repayments are made up of your principal (the amount you borrowed) and your interest (calculated daily using the amount you still owe). Since interest is calculated daily, paying off your principal faster reduces the amount of interest you have to pay over the life of your loan – ultimately saving you money.

Types of Mortgages

Lake Macquarie Mortgages & Commercial Finance will help you decide which plan is best for you. It is always a good idea to do a little research on what kinds of plans are available, so that you can better understand the plans proposed to you. Briefly, here are some of the types of loans you might be considering.

Repayment mortgage: This is the most common, and is the simplest to understand. Repayment mortgages work on a time-line basis, and unless there is a problem with your payment schedule, your loan will be guaranteed to be paid in full by the end of your commitment.
Endowment mortgage: This type of loan is paid bi-monthly. The first payment is for the interest on your loan, with the second being a fee paid to an insurance company for an endowment policy.
Interest only mortgage: This plan focuses on paying back the interest accrued first, leaving the capital owed to be paid at the end of the payment schedule.
Pension mortgages: This mortgage is also paid in two categories, bi-monthly. The first payment is for the interest on your loan, and the second is for a pension policy premium.

Protecting Your Home Mortgages

When acquiring a home equity loan, you will consider home mortgages payment insurance. In the event you are not able to pay for your monthly bill, this type of insurance will assist you.

Without this insurance, and in the event of a financial mishap, you could lose your home. There are several types of this insurance coverage, and they will vary depending on your financial background, whether you are self-employed, as well as whether you are a part-time employee.

After considering your options, it’s time to apply for a home mortgage loan.

Email Lake Macquarie Mortgages & Commercial Finance and arrange an appointment.

Once you apply, you will have a clearer picture as to exactly what types of loans are available to you for your financial situation.