The LoanAre you ready to begin your property investment journey?  Or are you looking to build your portfolio?  Anyone investing in property has to deal with finance, and most of the time, that means a loan.

Loan Types

There are two parts of a loan: the principle and the interest.  The principle is the amount you borrow, so it doesn’t change.  The interest, on the other hand, is calculated based on the principle, and interest rates change with the market.

Competing lenders offer different interest rates, but also different types of loans: variable, fixed, and split rate loans.  Each of these affects the interest payments you will make over the life of the loan.

A variable rate is most common in Australia, allowing the interest payments you are making to fluctuate with the market.  Interest rates may go down, saving you money, or up, costing you more.

A fixed rate can be locked in for a period of time, giving you stability and predictability.  However, if the market drops while your loan is on a fixed rate, you may be stuck paying higher rates.

With a split rate, you can combine fixed and variable rates.

Loan Pre-approval

Often, people win at an auction or make an offer on the property they want before they apply for the loan.  Then they have to wait and hope that all goes well.  But you don’t have to do it this way.

A loan pre-approval can be obtained before you make your final decisions.  Often, a pre-approval will be given for a time period such as six months.  If you purchase a property in that time and your circumstances have not changed, finance is already organised.

In fact, with a pre-approval, you can know just how much you can afford before you bid or make an offer.  You can bid with confidence that you are able to make good.  In some cases, you may even find that you can make an offer below reserve price and still be accepted because you already have approval for your loan.

If you need finance, want to apply for pre-approval, or simply want to know more about the finance of property investment, contact our team today.  We pride ourselves on creating personal finance solutions.

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