investment loans

The approval time for an investment loan can vary depending on the lender and your financial situation. On average, the process takes around 2-4 weeks from application to final approval. Here’s a typical timeline:

• Pre-approval (Conditional approval): 1-5 business days after submitting your application and documents.
• Full approval: After the property valuation and lender’s assessment, full approval can take another 5-10 business days.
• Settlement: Once approved, settlement typically occurs within 4-6 weeks, depending on the property’s contract.

If your finances are straightforward, you may get approval faster. Complex financial situations or incomplete documents can delay the process.

Lets Chat

+61 447503399

To improve your chances of getting approved for an investment loan, consider the following strategies:

1. Boost Your Credit Score: A higher credit score (above 700) makes you a more attractive borrower and can lead to easier approval and better interest rates.
2. Reduce Debt: Lower your debt-to-income ratio by paying off existing debts. Lenders prefer borrowers with a DTI ratio below 43%.
3. Increase Your Deposit: A larger deposit (20% or more) reduces risk for the lender and increases your chances of approval. It also helps you avoid Lenders Mortgage Insurance (LMI).
4. Provide Consistent Income: Demonstrate a stable income stream through payslips, tax returns, or financial statements. For self-employed borrowers, 1-2 years of business financials and tax returns may be required.
5. Keep Records of Assets and Investments: Having a history of successful investments or savings strengthens your financial profile.
6. Engage a Mortgage Broker: A broker can help find a suitable lender and present your financial situation in the best possible light.

Lets Chat

+61 447503399

Refinancing an investment loan involves replacing your existing loan with a new one, typically to get a better interest rate, reduce monthly repayments, or access equity. The process is similar to applying for a new loan and includes:

• Comparing Lenders: Look for better interest rates, lower fees, or more flexible loan features.
• Applying for the New Loan: Submit your application with the required documents, including proof of income and property valuation.
• Loan Approval: Once approved, the new lender will pay out the old loan, and you’ll start repayments under the new terms.
• Benefits: Refinancing can lower your interest rate, give you access to additional funds (cash-out refinancing), or switch to a more favorable loan structure (e.g., from variable to fixed-rate).

However, consider the fees involved (e.g., exit fees, break costs, and application fees) and ensure that refinancing offers long-term savings.

Lets Chat

+61 447503399

An investment loan is used to purchase property or assets with the goal of generating income or capital growth. Here’s how investment loans typically work:

1. Loan Structure: Investment loans can be structured as interest-only (paying only the interest for a set period) or principal-and-interest (paying down both the interest and the loan balance).
2. Leverage: Investors borrow funds to purchase an asset (typically property), aiming to earn a return through rental income or an increase in the property’s value.
3. Tax Benefits: Interest on an investment loan is often tax-deductible, which can reduce your taxable income.
4. Loan Repayment: You repay the loan through regular installments, and the rental income from the property can help cover these payments.
5. Loan-to-Value Ratio (LVR): Lenders often require a deposit of 20% or more, though some may allow lower deposits with Lenders Mortgage Insurance (LMI).

Investment loans have higher interest rates than owner-occupier loans due to the perceived higher risk for lenders.

Lets Chat

+61 447503399

When applying for an investment loan, you will need to provide the following documents:

1. Proof of Identity: Passport, driver’s license, or birth certificate.
2. Proof of Income: Recent payslips (usually 2-3 months), tax returns (1-2 years), and any rental income statements.
3. Bank Statements: Personal and savings account statements for the last 3-6 months to show cash flow and savings history.
4. Assets and Liabilities: Documentation of any other assets (e.g., investments, existing properties) and liabilities (e.g., credit cards, personal loans, mortgages).
5. Property Details: If you’ve already found an investment property, provide the contract of sale and details of rental income (if applicable).
6. Tax Returns and Financial Statements: For self-employed borrowers, business financials and tax returns for the last 1-2 years are typically required.

Providing these documents in a timely and organized manner can speed up the approval process.

Lets Chat

+61 447503399

Investment loans come with various fees, which may include:

1. Application or Establishment Fee: A one-time fee for processing your loan application, typically between $300 and $600.
2. Valuation Fee: The lender may charge a fee to appraise the value of the property. This fee usually ranges from $200 to $500.
3. Lenders Mortgage Insurance (LMI): If your deposit is less than 20%, you may be required to pay LMI, which can be a significant cost, ranging from 0.5% to 2.5% of the loan amount.
4. Ongoing Fees: Some lenders charge monthly or annual fees (e.g., $10 to $30 per month) to maintain the loan account.
5. Exit Fees: Early repayment or closing your loan within a certain time frame may trigger exit fees or early repayment charges. These can vary depending on the lender and the loan terms.
6. Break Costs: If you have a fixed-rate loan and pay it off early or refinance during the fixed period, you may incur break costs.

Understanding these fees upfront can help you better assess the total cost of the investment loan and avoid surprises during the loan term.

Lets Chat

+61 447503399