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Investment Property Finance Loan - Residential

Purpose

A residential investment property loan allows the borrower to buy a residential property which can be rented to others as a principal place of residence and generate recurring income.

Benefits

Borrowing to invest in property may provide passive income, investment diversification, and capital gains. Investors often negative-gear (where the interest payable and cost required to hold the property exceeds the income generated) their investment property to benefit from certain tax deductions. Amongst other things, the amount generated in rental income together with income from other sources are important factors that lenders consider when deciding on whether to lend or not, their terms.

Security

The loan is secured against the value of property being purchased and any other property offered as a top-up. There may be an opportunity to buy a property with a small deposit, usually between 10 to 20% of the purchase price. If the amount borrowed is more than 80% of the value of the property, lenders may require Lenders’ Mortgage Insurance or additional security which essentially protects them in case of default. This will be an additional cost to the borrower. This means, if the borrower defaults in their repayments and cannot repay the amount the lender may compel them to sell the property to settle the debt in full and call on any personal guarantees provided to support the loan.

Repayment terms

The borrower will be required to pay interest at a fixed or variable rate or a mix of the two on the principal outstanding and any agreed upfront, ongoing and exit charges

Process

To be matched with a Residential Investment Property Loan bidder, just follow our anonymous Investment Property Loans/Residential listing process.