The best investment loan is not the cheapest
As interest rates continue to fall and the prediction being they may fall even further next month, many borrowers and investors are considering changing lenders to take advantage of even cheaper rates; the issue that must be considered, particularly for active property investors is that the best investment loan is not the cheapest!
The lowest investment loan is not usually the best for your investment property
There are now over 1000 different home loan/investment loan products in the Australian property market and trying to work through them is even trickier than trying to find the best mobile phone plan to suit you.
The three areas we believe a property investor should be concentrating on are:-
- Flexibility – a loan that will allow you ‘movement’. If you decide to move house, or borrow some money for renovations or another investment property, or need to reduce your repayments while the kids are at high school a no-frill loan generally won’t have the redraw facility and you need. In particular you will need sub-accounts, some which will be fully tax deductible, and some that will have no tax deductibility.
- Interest rate – we are not suggesting that this is not important, it obviously is. However, a good broker nearly always negotiates a very favourable discount from the advertised rates so working through the advertised rates only can be unhelpful.
- Off-set accounts – These can be a great feature. Funds deposited in a standard interest bearing account you will probably earn less than 1.5 per cent a year and interest is normally taxable! However, when you deposit money in an offset account the interest credited should be the same as that charged on the investment or housing loan.
Your Lime property investment consultant will explain how an investment loan would potentially impact your financial circumstances. Working with a highly experienced property investment Mortgage broker can help you to explore the implications and perhaps structure your loans in a way that your home mortgage may end up being paid off much faster than you ever thought possible. This type of structure is not possible on a very low interest ‘no frills’ loan so The best investment loan is not the cheapest! Read more : http://goo.gl/f08Ha1
