Deposits can be made up of genuine savings and equity you hold in another property. The minimum deposit you’ll require varies between lenders, but in some cases, investment loans can be approved up to 95% LVR (loan to value ratio). A Nectar broker can find the most appropriate investment loan for your level of equity, deposit, and financial goals.
As a rule of thumb, the maximum amount of equity lenders allow as a deposit is 90% of the value of your existing property, minus the remainder of your home loan.
Calculate your usable equity
To find out exactly how much usable equity you have in your home, you’ll need a valuation. Your local Nectar broker will be happy to arrange one for you!
Rentvesting is a popular strategy for first home buyers who want to purchase a home but can’t afford to buy in the expensive cities where they work and live. As a rentvestor, you continue to rent yourself and purchase in a cheaper location, renting this property out to tenants.
For example, if you can’t buy in Sydney or Melbourne, you could purchase a rental property in Queensland, where average house prices are lower.
As a property appreciates over time, a rentvestor could sell their investment or use equity in the property for a deposit to buy a home where they live and work.
Just like owner-occupier mortgages, lenders look at your employment income when evaluating your ability to repay the loan. For rental investments, lenders will also consider a percentage of your proposed rental income.
Lenders also look at your living expenses and any loans or debts you are still paying off. The greater the difference between your income and expenses, the more comfortable most lenders will be in your ability to make repayments on the new loan.
Current investment loan interest rates are only slightly higher than owner-occupier loans, making now an attractive time to invest! These rates are helping both seasoned investors and rentvestors purchase property with a rental income and the potential for long-term capital gains.