What is the difference between investor home loans and normal home loans?

There is not much difference between the two options. Investors, first home buyers and refinance involve the same home loan types and features. Choosing what is right for you makes all the difference.

Can I use the equity in my own home as deposit to purchase an investment property?

Many investors have equity in their property and want to use it as a deposit. There are two ways this equity can be used.

The first option is to top up your existing loan and redraw the available equity in your home loan. This way your owner occupied home loan and your investment loan are two separate loans.

The second option is to combine the two securities whereby your lender will have two securities against one loan. Often when investors don’t have enough equity or any deposit outside their loan, they cross-collaterise the two securities. The risk in this structure is that if you can’t repay the mortgage on your investment property or if you want to sell your investment property, but your loan-to-value ratio would not permit it, you are either stuck with a loan you cannot pay or your own home is also at risk and can be re-possessed by your lender. If you would like to understand more, please contact us to discuss the best structure possible.

How much do I need for a deposit?

Some lenders need 5% deposit and others will want a 10% deposit before they approve your investment loan. Speak to us to understand if the equity in your property can be used as a deposit with the right strategy.

What fees or costs should I budget for?

Lender costs – You will incur the usual bank charges like application fee, settlement fee, ongoing fee, valuation fee (if any), legal costs and lender’s mortgage insurance (LMI).

Government costs – You will need to pay stamp duty, registration of land transfer and registration of mortgage depending on which state you are in. This is the biggest cost and all others are small in comparison to the stamp duty.

Other costs – There can be other costs involved like solicitor or conveyancer fee, title search fee, home insurance (in this case landlord’s insurance) and rates adjustment.