Investment Property Loan – How To Choose The Best
Who can Readily Invest in Real Estate?
Lately, the real estate investment niche is now considered as a profitable business opportunity. However, buying an investment property does require a lot of financial backing. The good news is that lately, all the financial support necessary for a real estate investment is reasonably accessible to many people in the form, of Investment Property Loans. With this in mind, it is entirely possible to invest in the real estate market, even if you have limited financial resources.
Investment Property Loan can be categorized into two groups.
- Residential Investment Property Loan – These loans are associated with investment properties, whose predominant use is residential. Residential properties are bought for future appreciation as well as rental income.
- Commercial Investment Property Loan – These loans are applied for a purchase of apartment buildings (with 5 or more units), stores, warehouses and much more.
These investment property loans can be accessed from several sources, such as financial institutions, credit unions, banks and even private brokers. For these lending institutions to dispense the loan, they first look at the borrower’s credit score, assets, and income, to determine if they are viable candidates for the loan. According to research regarding Australian population and real estate, it proved that a majority of people in the country use investment property loans to get property, land or a house/home. This technique offers them two main benefits:
- They Receive the benefits of capital growth and taxation deductions, even though the growth will not apply to the recent boom in Sydney and Melbourne. Property value does appreciate (increase in value) on a gradual basis but through capital growth.
- Negative Gearing is the other benefit. Gearing refers to borrowing money (loan) for investing purposes. The term negative gearing refers to financed properties that have been purchased using borrowed funds (loan) and where the income from the investment property after all deductions is less compared to the payable interest in a year.
What Tax Benefits are Available?
Did you know that negative gearing offers a significant tax benefit for all investors? This is because the cost of having an investment may be deducted, especially the loan interest from their taxable income. It is also important to note that these property loans come in various shapes and sizes. What does this mean? Well, it only means that it will depend on many factors such as the credit institute, investor’s requirements and much more. They can be offered as a short-term, interim or long-term. However, before you accept any loan, you should be aware of the loan terms such as its grace period, interest rate as well as payment schedule.
One has to make wise investment moves when it comes to identifying the best investment loan for any particular situation. Seeking out a savvy mortgage broker would also be a wise strategy. Did you know that this technique will limit all the hustle and bustle of trying to locate and identify the best investment?