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 an investor has started out by utilising the equity of 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. The risk in using your home as collateral is that if you can’t fund the mortgage for the investment property, the investment property and your home are at risk. When we meet, we can go through the options you have available.

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.

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.