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FAQ - Investing in Property

1. Why invest in property?
2. Are investment property loans the same as home loans?
3. Can my investment property loan be a different bank to my current bank?
4. Can rental income from my new investment property be included in my home loan assessment?
5. How can I fund the deposit on my new investment property?
6. What is negative gearing?
7. What is positive gearing?

Why invest in property?

Investing in the right investment property can deliver solid long-term returns for investors. It is important to do your research to help identify an appropriate location and type of property.

Are investment property loans the same as home loans?

In the majority of cases yes; interest rates and loan features will usually be the same regardless of the purpose. Be mindful that interest only repayments may be available for longer periods on investment loans.

Can my investment property loan be a different bank to my current bank?

Yes and no. If you are using equity in your home and already have a home loan, then you will most likely need to borrow from the same bank. Otherwise you could borrow from a different bank.

Can rental income from my new investment property be included in my home loan assessment?

Banks will include the majority of rent you expect to receive from the investment property when assessing how much you can borrow. This means you may be able to borrow more to purchase an investment than an owner occupied property that does not produce any rent.

How can I fund the deposit on my new investment property?

You will need a deposit when purchasing an investment property, just like buying any other property. However if you already own a home and have established a reasonable amount of home equity, then you may be able to tap into it to fund the deposit on your investment property.

What is negative gearing?

Investment property is negatively geared when the costs of owning it; such as interest, maintenance, repairs and depreciation; are greater than the income it produces. Negatively geared properties make a loss and enable a tax benefit to be claimed.

What is positive gearing?

Investment property can also be positively gear. This occurs when the investment income exceeds your interest and other expenses. Note that you may be subject to additional tax on any income derived from a positively geared investment.

 

 

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