Avoid costly mistakes
Borrow to Invest
How much do you borrow? How do you pay down the loan? Do you fix the interest rate or stay variable? What do you use as security for the loan? Which lender do you use? Who's name do you put the loan be in?
The range of investment loan options can be daunting and making mistakes when establishing the loan can prove to be costly in the future.
We help you quickly cut through the clutter to find the most suitable structure, loan and lender for you. Here are a few answers to the key questions.
Please note. This page contains information relating only to investment loans, not properties. If you are seeking information about investment properties, I encourage you to head to our Investment Property Advice page, under services.
You are also less likely to incur penalties for overpaying a fixed rate investment loan if you are directing all overpayments to any non-tax effective debt first (see questions above).
However, a variable rate is more flexible and will continue to fall as rates drop. So if interest rates are forecasted to fall, or if you plan on selling the investment property soon, you may wish to consider a variable rate investment loan.
Instead, you may wish to separate the investment loan into two parts, one part equal to 80% of the value of the investment property (to avoid mortgage insurance), secured only by the investment property and one part equal to the remaining 20% (plus costs) secured by your home. Separating the loan in this way limits the amount of debt secured by your home and keeps everything flexible if sell a property.
Therefore, you may wish to consider having your investment loan with a different lender than your home loan.