6 Tips for Comparing Investment Loans

6 Tips for Comparing Investment Loans

Published on 23 Jul 2018

If you are a property investor, finding a competitive investment loan rate is important so you can maximise returns from your investment. Obtaining a low-interest rate will give you the benefit of lower repayments that could save you thousands of dollars.

Shopping around for a good investment loan is important. Here are some tips on how to compare different investment loans:

1.Investment loan rate

Securing a low investment loan rate is one of the best ways to maximise returns from your investment. Even the slightest change can make a big difference to your repayments in the long-term.

As an investor, you have the option to choose between a variable rate and a fixed rate home loan. A variable rate loan will give you the chance of securing flexible loan features but you are susceptible to rate increases that will also increase your repayments. Of course, there’s also a possibility that your interest rate may decrease.

On the other hand, a fixed rate loan means that your interest rate is fixed for an agreed period of time. A fixed rate loan will give you the benefit of predictable repayments, but limited loan features.

Choosing between a variable rate and a fixed loan rate will depend on your investment strategy, so it’s important to compare the two to distinguish which one will suit you better.

2. Upfront and ongoing fees

Different lenders will charge different kinds of fees. It’s important to take this into consideration when comparing loans because upfront and ongoing fees can add up.

3. Investment loan features

Having the right features attached to the investment loan can help you achieve your financial goals. Some loan features that may help you with your strategy are a redraw offset facility, interest-only repayment option, and unlimited additional repayments.

A redraw offset facility is a sub-account linked to your loan. This will reduce the amount of interest you need to pay if you have money in the facility. 

For example, you have a loan amount of $400,000, but you have $10,000 in your 100% redraw offset facility. You will only pay interest on $390,000. The more money you have in your redraw offset facility, the more money you can save in interest.

Interest-only repayments can help you free up some cash because you are only paying the interest on the loan for a period of time, typically between 1 and 5 years. This can be beneficial if you are on a tight budget with your investment property.

If you plan to put extra funds into your investment loan, an unlimited additional repayment option will let you achieve that without the lender penalising you. Of course, you have to be in a variable rate loan in order to make extra repayments.

4. Investment loan calculator

An investment loan calculator will help you calculate your repayments easily when comparing investment loans. This can also help you budget and plan out what investment strategy will work for you. To use the calculator, you just need to input details such as your loan amount, interest rate, loan term, repayment type and frequency.

5. Comparison rates

There is a comparison rate and an advertised rate. The latter is what you see advertised by the lender and the former is the closest representation of a loan’s cost.

Checking the comparison rate will help in comparing different investment loans and will save you a lot of time. Visiting comparison websites can also help you compare investment loan products from different lenders.

6. Key Fact Sheets

Another tool that can help simplify comparing investment loans is the key fact sheet. These include summarised information about each loan such as the cost of the loan, and a more personalised comparison rate. You can ask financial institutions about how to obtain a key fact sheet.  

Securing an investment loan that suits your needs and strategy is an important aspect of being an investor. Make sure you compare different investment loans so you know you are getting the best loan for you.

6 Tips for Comparing Investment Loans

6 Tips for Comparing Investment Loans

Published on 23 Jul 2018

If you are a property investor, finding a competitive investment loan rate is important so you can maximise returns from your investment. Obtaining a low-interest rate will give you the benefit of lower repayments that could save you thousands of dollars.

Shopping around for a good investment loan is important. Here are some tips on how to compare different investment loans:

1.Investment loan rate

Securing a low investment loan rate is one of the best ways to maximise returns from your investment. Even the slightest change can make a big difference to your repayments in the long-term.

As an investor, you have the option to choose between a variable rate and a fixed rate home loan. A variable rate loan will give you the chance of securing flexible loan features but you are susceptible to rate increases that will also increase your repayments. Of course, there’s also a possibility that your interest rate may decrease.

On the other hand, a fixed rate loan means that your interest rate is fixed for an agreed period of time. A fixed rate loan will give you the benefit of predictable repayments, but limited loan features.

Choosing between a variable rate and a fixed loan rate will depend on your investment strategy, so it’s important to compare the two to distinguish which one will suit you better.

2. Upfront and ongoing fees

Different lenders will charge different kinds of fees. It’s important to take this into consideration when comparing loans because upfront and ongoing fees can add up.

3. Investment loan features

Having the right features attached to the investment loan can help you achieve your financial goals. Some loan features that may help you with your strategy are a redraw offset facility, interest-only repayment option, and unlimited additional repayments.

A redraw offset facility is a sub-account linked to your loan. This will reduce the amount of interest you need to pay if you have money in the facility. 

For example, you have a loan amount of $400,000, but you have $10,000 in your 100% redraw offset facility. You will only pay interest on $390,000. The more money you have in your redraw offset facility, the more money you can save in interest.

Interest-only repayments can help you free up some cash because you are only paying the interest on the loan for a period of time, typically between 1 and 5 years. This can be beneficial if you are on a tight budget with your investment property.

If you plan to put extra funds into your investment loan, an unlimited additional repayment option will let you achieve that without the lender penalising you. Of course, you have to be in a variable rate loan in order to make extra repayments.

4. Investment loan calculator

An investment loan calculator will help you calculate your repayments easily when comparing investment loans. This can also help you budget and plan out what investment strategy will work for you. To use the calculator, you just need to input details such as your loan amount, interest rate, loan term, repayment type and frequency.

5. Comparison rates

There is a comparison rate and an advertised rate. The latter is what you see advertised by the lender and the former is the closest representation of a loan’s cost.

Checking the comparison rate will help in comparing different investment loans and will save you a lot of time. Visiting comparison websites can also help you compare investment loan products from different lenders.

6. Key Fact Sheets

Another tool that can help simplify comparing investment loans is the key fact sheet. These include summarised information about each loan such as the cost of the loan, and a more personalised comparison rate. You can ask financial institutions about how to obtain a key fact sheet.  

Securing an investment loan that suits your needs and strategy is an important aspect of being an investor. Make sure you compare different investment loans so you know you are getting the best loan for you.

6 Tips for Comparing Investment Loans

6 Tips for Comparing Investment Loans

Published on 23 Jul 2018

If you are a property investor, finding a competitive investment loan rate is important so you can maximise returns from your investment. Obtaining a low-interest rate will give you the benefit of lower repayments that could save you thousands of dollars.

Shopping around for a good investment loan is important. Here are some tips on how to compare different investment loans:

1.Investment loan rate

Securing a low investment loan rate is one of the best ways to maximise returns from your investment. Even the slightest change can make a big difference to your repayments in the long-term.

As an investor, you have the option to choose between a variable rate and a fixed rate home loan. A variable rate loan will give you the chance of securing flexible loan features but you are susceptible to rate increases that will also increase your repayments. Of course, there’s also a possibility that your interest rate may decrease.

On the other hand, a fixed rate loan means that your interest rate is fixed for an agreed period of time. A fixed rate loan will give you the benefit of predictable repayments, but limited loan features.

Choosing between a variable rate and a fixed loan rate will depend on your investment strategy, so it’s important to compare the two to distinguish which one will suit you better.

2. Upfront and ongoing fees

Different lenders will charge different kinds of fees. It’s important to take this into consideration when comparing loans because upfront and ongoing fees can add up.

3. Investment loan features

Having the right features attached to the investment loan can help you achieve your financial goals. Some loan features that may help you with your strategy are a redraw offset facility, interest-only repayment option, and unlimited additional repayments.

A redraw offset facility is a sub-account linked to your loan. This will reduce the amount of interest you need to pay if you have money in the facility. 

For example, you have a loan amount of $400,000, but you have $10,000 in your 100% redraw offset facility. You will only pay interest on $390,000. The more money you have in your redraw offset facility, the more money you can save in interest.

Interest-only repayments can help you free up some cash because you are only paying the interest on the loan for a period of time, typically between 1 and 5 years. This can be beneficial if you are on a tight budget with your investment property.

If you plan to put extra funds into your investment loan, an unlimited additional repayment option will let you achieve that without the lender penalising you. Of course, you have to be in a variable rate loan in order to make extra repayments.

4. Investment loan calculator

An investment loan calculator will help you calculate your repayments easily when comparing investment loans. This can also help you budget and plan out what investment strategy will work for you. To use the calculator, you just need to input details such as your loan amount, interest rate, loan term, repayment type and frequency.

5. Comparison rates

There is a comparison rate and an advertised rate. The latter is what you see advertised by the lender and the former is the closest representation of a loan’s cost.

Checking the comparison rate will help in comparing different investment loans and will save you a lot of time. Visiting comparison websites can also help you compare investment loan products from different lenders.

6. Key Fact Sheets

Another tool that can help simplify comparing investment loans is the key fact sheet. These include summarised information about each loan such as the cost of the loan, and a more personalised comparison rate. You can ask financial institutions about how to obtain a key fact sheet.  

Securing an investment loan that suits your needs and strategy is an important aspect of being an investor. Make sure you compare different investment loans so you know you are getting the best loan for you.