There are a number of home loan options available for those interested in beginning an investment portfolio. Things like variable- and fixed-rate home loans are traditional models for securing credit and purchasing property, and can be used successfully to buy real estate for a wide range of reasons.
However, it could be worth investigating other, more obscure mortgage options available to you and your family – especially if it's investment loans you're looking into. For example, investigating interest-only loans could be a great way to secure investment property easily and without hassle.
What is an interest-only home loan?
With a regular home loan, as you begin to make repayments on the principal amount, you will also be charged interest. Therefore, with every repayment you make, you're making progress on your overall home loan amount while also ensuring you're reimbursing the lender with interest.
With an interest-only loan, your weekly repayments aren't really that – you don't actually contribute towards the principal amount at all. Instead, you only pay the interest charged on the full home loan amount for a set period of time. Naturally, this is lower than if you were paying both parts but it also remains constant due to the unchanging principal.
What is the point of an interest-only home loan?
These types of home loan are great for property investment. By doing thorough research and finding a great property expected to undergo a degree of capital growth over a period of time, these home loans can work out cheaper in the long run. After a satisfactory amount of growth has occurred, simply sell the property for the higher price, pay off the principal of the loan in one payment and keep the remainder from the sale as a profit.
You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.