Investment Home Loans are directed at the property investor market and are used to purchase investment properties and refinance existing investment debt.
Currently, investment home loans have a higher interest rate than home loans in order to slow down investment lending. The two broad types of investment home loans are the same as regular home loans. “Basic” investment loans and “Professional Package” investment loans.
A basic investment home loan is a low-cost option with no ongoing fee’s and does not have an offset account, but it does allow you to pay extra off the loan. Any overpayments can then be redrawn later, should you require the funds.
A professional package home loan generally has an annual package fee of between $199 and $395 and includes redraw, an offset account, free credit card and quite often discounts on interest rates and insurance.
There are several options available with both loans, which include the interest rate choice being either fixed or variable or a combination of both with a split loan and then you can choose the repayment type being principal & interest or interest only. Please bear in mind that paying extra off an investment loan and redrawing it may have unintended tax consequences and should be discussed with a tax professional beforehand. Loan structuring is crucial with investment loans, the type of loan you choose, and the options selected will depend on your personal circumstances and should be carefully considered before a choice is made.
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