BETTER INVESTMENT LOANS
Why Choose Us
Offset accounts are almost essential for any property owner. If you have a mortgage on the property you live in I’d say you definitely want an offset account linked to that property. If you already have an offset account linked to your home then there aren’t too many good reasons to have a second offset account linked to an investment property. Why leave cash in the investment offset account when that cash could be in the owner-occupied offset account offsetting the ‘bad debt'(non-tax deductible)? Don’t offset ‘good debt'(tax deductible) when you could be offsetting ‘bad debt’. Feel free to Give Us A Call to chat through all your home loan options.
An investment can either make money or lose money. Negative gearing is when your investment costs more than it makes; positive gearing is when your investment makes more than it costs. The logic behind a negatively geared investment is “I’ll take a minimal loss year on year in hopes that the capital gains from selling the investment will exceed the total loss.” A loss can be used to reduce your taxable income which will reduce the amount of tax you pay. However, you are only reducing the tax you pay because the income from your investment isn’t covering your costs. Hence, you will still need to make up for the negative cash flow from other sources. Negatively geared properties aren’t “bad” but they should never be the aim. Why take a loss when you have the option to take a gain?
Well, the short is answer 10% of the purchase price. Due to policy changes by most lending institutions over the last couple years, the maximum LVR for investment loans is 90%, although there’s lenders mortgage insurance (LMI) to consider. You’ll have to pay LMI unless you’re a Qualified Professional. This LMI is usually added to the loan. If a 10% deposit sounds ridiculous considering you’re in your early 20’s, saving $5/month, and watching the average Sydney property price soar over a billion, fear not; there are ways to borrow 100% of the purchase price. These ways include your parents going guarantor, using equity in an existing property, or receiving a ‘gift’ from a family member. Drop us a line to go over your options in further detail.
This is tough to have a short answer for but just know the banks take quite a conservative approach. Each bank has a borrowing capacity calculator that will add about 2.5-3% to the actual interest rate. So if the actual rate you’d get is 5%, the banks could be assessing your loan capacity by using an 8% rate. Obviously, they take into account all your income/expenses plus they also have built-in benchmarks for living expenses based on your age, number of dependents, etc. Then if you’re receiving rental income from a property the banks usually only 80% of the income. And on top of that each lenders calculator differs form the next so you’ll get different outcomes with each bank. Check out the Finance Workshop to get an idea of how much you can borrow. As finance brokers we practically study these bank calculators. Drop us a line and we’d enjoy doing the legwork for you to work out your best options.
Speak to an experienced mortgage broker who understands how to setup the correct loan structure for your investment loan(s). Sometimes it’s a bit extra work to get the right structure in place so ensure whoever is handling it is doing it properly. A good investment strategy relies on optimising your equity position and leveraging your ability to purchase again down the track. Getting the loan structure wrong or choosing the wrong lender from the outset is a good way to stunt the growth of your property portfolio.
Purchasing an investment property is exciting and can often become more emotional than investments should be. Investing into property is like any other investment – It’s a numbers game and emotions shouldn’t interfere with it. Focus on things like rental yield, capital growth projections, vacancy rates, investment property finance structure, and focus less on colours and bedroom sizes. If it can get you the right rental income at the right purchase price in the right area then go for it – after all it’s an investment not your dream home.
Securing the right investment property finance is just as important as choosing the right property. For example, did you know we have a long list of professions, ie medical, lawyers, accountants, engineers, that could be eligible for 90% loans with NO lenders mortgage insurance (LMI). See our Qualified Professional Finance to learn more. Knowing ways to reduce costs or LMI means your deposit money can be stretched further helping you build wealth faster. Whoever is doing your loans should be work closely with your accountant to ensure appropriate tax effectiveness for each of your loan structures.
RECENT GOOGLE REVIEWS
Eric has been amazing to work with. Extremely intelligent, personable and extremely good at finding a great mortgage that was the right fit for us. Highly recommended, unbeatable service.
We’ve cycled through a few mortgage brokers over the years now after never really being pleased with the service we were provided. But wow are we so happy our friends recommended Eric at Financial Engineers. It was refreshing to have someone work so hard to get our home loan approved. We didn’t give him much time but he got it done for us with time to spare. Thank you for all your efforts and will happily recommend you to anyone who asks.
Highly recommend Financial Engineers. Eric did us a great service in helping us find the best personal loan in a complex situation with multiple income streams. From start to finish it was clear that Eric was working hard to find us the best loan to suit our needs. Thank you!
We Recently used Eric when refinancing to raise funds for a family business. Eric was efficient, friendly and found the best deal for us out there with no fuss and bother. Be smart, use Eric 🙂