Investment Property Loans
An investment property can be purchased with a low doc loan just as a home loan can. The same terms and conditions apply as do the qualifying criteria.
An investment property can be purchased with a low doc loan just as a home loan can. The same terms and conditions apply as do the qualifying criteria.
Rental income generated from an investment property is taken into account when a bank calculates your serviceability. Often, only 75% of the rental income is used to calculate due to the possibility of vacancy of the property and repairs and maintenance. Rental yields can range from 4% to 6% which is sufficient to repay the interest. With negative gearing there are significant tax advantages for property investors.
In recent years, banks have applied a higher interest rate on loans taken out for investment purposes due to Reserve Bank capital requirements. Usually the interest rate is higher by 0.25% to 0.5%.
Off the plan property purchases can also be purchased with a low doc loan. An off the plan purchase will require a deposit on purchase and the remainder on settlement. The loan application needs to be made closer to settlement of the property.
