Investment Property Loan FAQs

12 April 2021

Investment Property Loan FAQs

If you’re thinking about getting an investment property loan, you probably have plenty of questions. Here are the most common ones we get from our Wisebuy clients.

How much deposit do you need for an investment property?

This varies depending on the lender. Most will require a higher deposit than they would for a residential home loan.

Can I use the equity I have in my home for an investment property loan deposit?

Yes, this is a common way to fund a deposit. Your equity is the amount of ownership you have in your current home. It’s calculated by subtracting how much you owe on your home loan from the current market value of your home.

For example, if your home is worth $700,000 and you owe $400,000 on your home loan, you have equity of $300,000 (i.e. $700,000 less $400,000).  You can use some of this equity for your deposit. 

What is negative gearing?

‘Negative gearing’ is an investment property term that means the rental income from the property doesn’t cover the property’s expenses. Although this doesn’t sound ideal on the surface, it results in you paying less tax. The deficit could also be more than offset by the increase in the property’s value over time.

Can I claim investment property expenses as a tax deduction?

Yes you can. Common tax-deductible investment property expenses include:

  • investment property loan interest and fees
  • repairs and maintenance expenses
  • council rates
  • property management costs (if you hire a property manager)
  • body corporate fees (if you buy a unit or townhouse)
  • insurance.

How could I afford investment property loan repayments?

You can use the rental income from your investment property to help you make your loan repayments.

Can I get an interest-only investment property loan?

Yes, interest-only investment property loans are available. You can usually get them for up to 5 years. After that time, the repayments usually revert to a standard ‘principal and interest’ loan

How much can I borrow?

This depends on how much deposit you can provide, how much you can afford to repay, and the lender’s policies. Use our borrowing power calculator to work out how much you can potentially afford to borrow.

How much will my repayments be?

This depends on how much you borrow, the type of loan and the loan term. Use our repayments calculator to find out how much your repayments would be.

How much stamp duty will I pay?

This depends on the value of the investment property you want to buy. You can use our stamp duty calculator to work out the amount.

How we can help

Taking out an investment property loan is an important decision. There’s a huge range of lenders and products out there. At Wisebuy Investment Group, our mortgage brokers in Newcastle are experienced and licensed brokers can help you to find the right loan for your needs. We can also help you with your application.

Contact us today for an obligation-free chat!