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Buying a property to rent out is a popular form of long-term investment in Australia, yet finding the right investment property can take a lot of time and effort. Where and what you buy will affect the return on your investment. Some important factors to consider when looking for the right property are:
Finding the best investment loan is just as important as finding the right property. Choosing the right investment loan is not always about getting the lowest interest rate. The best loan for your investment property is the one that works best for your investment strategy.
For instance, a loan with a cheap interest rate could be unsuitable for an investor wanting to buy and then re-sell quickly if that same loan comes with a large application fee and a substantial penalty fee for breaking the loan. The excessive fees would reduce the overall profit.
An investor who wants to buy a rental property and hold onto it for years could be missing out on lower interest rates available or alternative loan options to the ones their bank offered over the counter.
These are just a few ways that investors could be losing money by not making the effort to find the right investment home loan product to suit their individual investment strategy.
Many investors think they need a deposit to purchase an investment property. However, many banks may allow you to use the equity in your home to secure the entire cost of purchasing your investment property.
The type of home loan you choose can also be an important factor to consider for your overall investment strategy.
Different types of home loans have different levels of flexibility. The amount of flexibility you need will depend on your investment goals. It is important to understand the difference between an investment loan that helps you reduce debt more quickly and an investment loan that can help you to purchase more investment properties in future.
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