What’s the difference between an investment loan and an ordinary home loan?

Most of the same types of home loans and loan features apply for investors as for owner occupiers. Some lenders may charge higher rates for investment properties if the associated risks are higher.

Can I use equity in my home as a deposit for an investment property?

Many property investors have started out by utilising equity in their own home. Banks will usually accept equity in a home (or other property) as additional collateral against which they are prepared to lend. This means you could potentially borrow the full purchase price of the property, as well as all costs (stamp duty and other fees) without having to contribute any cash at all.

What is negative gearing?

This is when the cost of owning a property is higher than the income it produces. If the rent you get for an investment property is less than the interest repayments, strata fees, maintenance and other costs, your investment is negatively geared, or making a loss. This loss can be offset against your income, reducing your income tax bill.

How much will my repayments be?

This can vary depending on your circumstances including your income, the property price, interest rate, loan structure, rental income, costs and tax rebates applicable. In many instances due to the lion’s share of the repayments and costs being covered by rent and your tax rebate, a property can cost you as little as $20 per week.

What is landlord’s insurance?

​Landlord’s insurance provides standard building and contents cover plus cover for theft or malicious damage to the property by tenants and covers loss of rent in certain circumstances. It also covers the owner’s liability (e.g. if a tradesperson is injured while working in the property). Landlord’s insurance is an affordable extra safeguard and strongly recommended for all investors.

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