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30 Aug 2013

Property investment loans – What to consider?

 

Property investment loans are similar to a regular home loan for your primary place of residence (PPOR)  in that they are offered in a variety of formats, interest rates and options.  The following is a list of the common considerations:


Deciding on the length of your loan

One of the most important factors is calculating the optimal period of time that will allow you as an investor to reach your goals.  Obviously this depends on whether you want to pay the investment property of as soon as possible or to pay the minimal amount to free up resources for other investments or lifestyle purposes.  Even reducing a loan amount by 3-5 years can reap significant savings in interest over the loan period.

Picking a lender

There are a myriad of loan ‘products’ in the marketplace today and this allows flexibility for investors on finding a package that suits their needs.  If you are a hands on investor then you may decide to research and follow up on a loan that suits you.  It may be that you want to seek professional advice; in this case a broker may be of interest to you.  A broker can quickly browse through hundreds of loan offerings to match your specific needs.

Fees

Be aware of any fees included in the loan product.  Sometimes a cheaper interest rate may hide nasty surprises such as large fees for extra repayments or wanting to leave a loan ahead of the fixed period.

Consider using a loan redraw or offset account

Having an offset account with a redraw facility has the advantage of allowing you to transfer all savings to the loan account which will reduce the interest repayments.  The ability to redraw is also a good option and allows the flexibility to move your money externally depending on your needs.


The above list are some of the primary items you should be considering whilst searching for a loan suitable for investment.  If you require further advice contact Alert Property Group.

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