Interest rates are currently at record-breaking lows. However, while you may sweep in a healthy amount of income on a weekly basis from your investment property, keeping in tune with how your loan is working for you is essential – as a quick review could reveal thousands of dollars in real cash savings.
“It’s imperative that you keep really good records – impeccable records – for accounting purposes,” shares mortgage broker at Smartline Personal Mortgage Advisers, Samantha Cranny.
Cranny sits down with Your Investment Property magazine editor Sarah Megginson to help investors gain a broader understanding on how they can minimise loan repayments and consequently gain a higher net return from their properties.
Because lenders treat owner-occupied and investment loans differently, investors need to be aware of how the interest rates operate, Cranny explains.
This can involve lenders “loading the rate”, which refers to them giving it a slight increase when the loan is for investment purposes.
“Years ago, the rate was the rate whether it was owner-occupied or investment, but now it’s a completely different ball game, and if it is an investment, now they load the rates. If it’s interest only, they again load the rate,” Cranny says.
This means you could end up paying far more for an interest-only investment loan than you would pay for an owner-occupier loan.
However, not all lenders load their risks the same way – so you could save a small fortune by moving to another lender.
“It’s important to have a good broker that’s actually going to be shopping around to get you the best rate,” Cranny says.
“[Lenders] all have different specials on at different times. That’s the other beauty of going with a broker – we get to see all of those things.”
To find out more about how you can secure a competitive rate, what to be aware of before signing into an investment loan and what can potentially hold you back from obtaining approval for a loan, watch Samantha Cranny’s full interview above.