Investment Property Loans
With hundreds of investment property loans available from an extensive panel of lenders, we’ll ensure you get a suitable loan that will support your wealth-creation strategies. Unlike most mortgage brokers, Melbourne Mortgage Advice has years of experience in the property market as long-term property professionals, so we’ll support your purchase with high-value guidance backed by over 20 years of property expertise.
Get professional investment lending advice and bring your wealth creation plans to life
The Australian property market has performed consistently well over the last decade. This has inspired more people than ever before to invest in property. The prospect of attractive yields from simple investment strategies, means that you have the potential to reach financial freedom.
Whether you’re a seasoned investor or just starting out, we’re here to provide help and advice about financing your investment property. We take the time to understand your individual needs and situation and help you to set a purchasing budget before you start your property investment journey. We have expertise to provide you with everything you need to know about buying an investment property. We’ll take you through the pros and cons, the costs of investing, the questions you should ask, securing your investment loan, and tips for managing the property once it’s yours. When done correctly, investing in property could help you create wealth for your future.
When borrowing to invest, it’s prudent to fully understand your borrowing capacity and purchasing power before negotiating a purchase. As investment loan specialists, we understand the finer details of structuring finance to maximise the potential benefits of investing. We are highly experienced in working with financial planners and accountants to ensure that the finance we arrange is tailored to their professional advice. We also help our clients with detailed property research information, a valuable resource that helps refine the search process to save you time and money.
We have helped hundreds of investors finance their wealth creation strategies and have extensive real world experience in understanding what works and what doesn’t. From balancing the needs for cashflow versus capital growth, to understanding the risks associated with various mortgage strategies, we have the knowledge to ensure our clients are able to make intelligent and informed decisions.
The Australian property market has performed consistently well over the last decade. This has inspired more people than ever before to invest in property. The prospect of attractive yields from simple investment strategies, means that you have the potential to reach financial freedom. Whether you’re a seasoned investor or just starting out, we’re here to provide help and advice about financing your investment property. We take time to understand your individual needs and assist you to set your purchasing budget before helping you along the way throughout your property investment journey. We assist our clients with the property search process by providing CoreLogic property research reports. These professional reports provide important insights into the property being considered and help our clients to save time and refine their search process.
What is gearing and how does it work?
As a property investor, you’ve probably heard the terms ‘positive’ and ‘negative’ gearing bandied around quite a bit. But how do these strategies work, and how could they impact your investment profits? There are three types of gearing strategies:
Positive gearing is when your rental return from tenants is higher than your interest repayments and outgoings. This is considered a positive cash-flow strategy.
Negative gearing is when your rental return is less than your interest repayments and other outgoings. This is considered a tax-minimisation strategy – as any costs associated with holding the investment are usually tax deductible.
Neutral gearing is when you earn the same amount from your investment property as you pay in interest and other outgoings.
Why is negative gearing is the most popular strategy?
The main benefit of negative gearing is that any losses you make on your investment property may be used as a tax offset against other income earned. This means that you end up reducing your taxable income and therefore your tax payable. We can help to structure your loan and secure your investment property funds, but for tax advice around gearing your property, speak to your accountant. If you don’t have one, we can refer you to some highly reputable and trusted tax professionals.
Managing Your Investment Property
Once you’ve purchased your investment property, it’s up to you to ensure the property is well managed. You can either do this yourself or hire a property manager to do it for you. There are pros and cons to both options.
Managing your own investment property: If you choose to manage the property yourself, you won’t need to pay management fees. However, you will be solely responsible for taking control of all aspects of the property, including managing your property’s legal compliance with rental laws and regulations.
Hiring a property manager: If you choose to hire a property manager (typically a real estate agent), the management fees are usually tax deductible and you will not have to worry about things like collecting rent, finding new tenants, or dealing with tenant’s issues.
Responsibilities of a property manager include:
Understanding the laws of property rental, including the landlord and tenant’s rights and responsibilities
Finding the most suitable tenants, including conducting reference checks
Showing the property to potential tenants
Establishing a residential tenancy agreement and then completing a condition report
Acquiring a bond and rent in advance from new tenants
Chasing rent payments and reviewing rent prices
Conducting building and pest inspections
Ensuring all basic utilities are installed and in good working order
Organising repairs, maintenance and renovations if required.
Costs of owning an Investment Property
Owning an investment property comes with ongoing costs. Making sure you understand what these are is important because they affect your budget and your overall net profit. While some of these expenses can be claimed back in tax, not all of them can. Here’s a list of ongoing costs.
Council and government taxes: These are unavoidable and vary from state to state, so make sure you find out what the rates are in your area.
Body corporate fees: Also known as strata fees or strata rates. These are usually paid on a quarterly basis and help pay for the maintenance of the building and common areas. Only payable where a body corporate exists.
Property compliance: National residential tenancy laws require landlords to ensure rented premises are maintained in good order. This includes all gas and electrical appliances provided by the landlord, which must be safe to use and properly maintained.
Property management fees: A property manager costs approximately 7-10% of your total rental income. However, in many cases this service fee is tax deductible.
Repairs and maintenance costs: This cost will vary depending on the property. Many property investors prefer to purchase new properties to minimise these costs. However, it makes sense to have additional funds put away in case you need to make emergency repairs.
Tips for future investments
Once your tenants are in place and start paying down your mortgage, or you build some equity through property value growth, you may consider adding to your property portfolio.
Use the equity in existing property: Make your property work for you! Refinancing your property investment loan to access equity for the deposit on your next investment property is a popular financing strategy. Ask us to help you determine your equity position.
Mortgage offset account: A mortgage offset account allows you to save on the amount of interest you need to pay on your loan. It’s basically a transaction account into which your salary and other cash can be deposited, allowing you to withdraw cash when you need it. The money in the account is offset against the principal you have left on your mortgage. You could potentially use the money you save in your offset account as a deposit for your next investment property.
Save your annual lump sum payment and windfalls: Consider using your tax refund, an inheritance or work bonus to help with a deposit for purchasing an investment property.
Save a little extra every month: Set up a separate savings account and set a target for a deposit. This history of savings will help you to obtain finance for another property.
If interest rates drop: If you have a variable rate loan and the interest rate drops, save the difference and put it towards a deposit on another property.
Stay informed: Staying informed about interest rate movements and new products can save you money. Over the lifetime of your loan, we recommend checking other loan products and facilities that may better suit your changing needs. We also recommend reviewing your mortgage interest rate and equity position on a regular basis—we can help you do this.
Using us as your investment finance specialists
By using our services, you’ll have a specialist who is dedicated to helping you achieve your goals and looking after your needs. We’ll work hard for you to get your investment loan approved. We’ll work closely with real estate agents, conveyancers and lenders throughout the process and put your needs first, every step of the way. We know that establishing a property portfolio is just a dream for many people. Making it a reality all starts with getting professional lending advice—and we’re here to make that happen for you. No matter what changes, whether it be your personal circumstances, your employment situation, interest rates or the economy—we’re here to give you expert advice for all your finance lending needs.
We have also developed a comprehensive guide on the Property Investment process and encourage you to download our Property Investment Guide PDF to learn more about your options. It’s a great resource and we are proud to share it with Australian borrowers.