There are a few different Investment Loans that are suitable for different purposes. These include:
- Investment Property Loans
- Borrowing to invest into shares
- Margin Loans
- Superannuation Fund Loans
Investment Property Loans
An investment property loan is generally the same as a standard home loan with a similar application process. The exception being that the income from the investment property is also included within your affordability calculation.
Where the property being purchased for investment is a commercial property, a commercial loan will be required.
Borrowing to invest into shares
A standard home loan can also be used to fund investments in shares, managed funds or other income producing investments at very attractive interest rates.
Margin loans are designed specifically to fund investment in eligible shares and managed funds. The loan amount is secured against the underlying investments, typically to the value of between 30 and 70 per cent of the investment, and is subject to a margin call should the value of your security drop.
Margin loans are most commonly used when you do not want to use your residential property as security, or when you don’t have enough equity in your property to service an additional investment debt but do have the cash flow required.
Margin lending can be quite complex and you need to fully understand the risks involved, so seek our advice before using this strategy.
SMSF Limited Recourse Borrowing Loans
You may be able to borrow money to purchase property using a SMSF.
SMSF loan terms and features, including interest rates, Loan to Value Ratios on residential or commercial properties and the loan term and amount, will vary widely between lenders so it’s best to contact us to find out what options are available to you.
There are strict legal requirements in relation to loans to SMSF’s and lenders have developed specific loan products for SMSF loans. All SMSF loans and property purchases should be supervised closely by your Accountant and/or Financial Adviser and Solicitor. This is definitely not an area to DIY!