One of the best reasons to secure a loan is to purchase an income-generating asset. Seasoned financial experts will tell you this strategy enables you to pay off your debt while simultaneously making a few dollars.
A business venture is one investment worthy of a loan. However, if you’re not yet ready to run your own company, consider an investment loan for a house. A home loan could bankroll your targeted property and generate passive income as your land and house’s value will increase over time.
Not all loans, however, are made equal. You need to keep an eye on certain features, especially if you’re in the market for a mortgage for healthcare workers. Don’t just look for low-interest rates. Here are five of the best features to look for in an investment loan!
The Interest-Only Feature
The beauty of this investment loan is the period in which you pay interest. It usually lasts from five to ten years, during which the principal amount of the loan stays the same for the entire time.
Benefits of this type include lower monthly repayments and tax claims if you’re renting out these properties.
Interest-only loans are the best option if you have several other debts you are paying for, allowing you to direct your funds to other investments.
The Repayment Frequency Feature
This particular loan trait empowers loaners to organise payments according to their convenience. Conversely, from the repayment holiday feature, it is strongly recommended you sync your repayment schedule with the frequency of your tenants’ rental payments.
For example, if you receive rent pay weekly, pay off the home loan weekly. If monthly, then monthly, and so on.
Maximising the repayment frequency feature makes a huge impact on your long-term loan payments. The more often you set a repayment schedule, the faster you can pay off the loan.
The Repayment Holiday Feature
Repayment holidays come in handy when a particular property has no tenants or renters to generate your portfolio with income. As the term implies, this feature allows borrowers to take a break from making repayments until they find tenants. The maximum time allotted is one year.
It is important to note that this feature is only allowable if you have made an advance payment to your lender. Discuss these terms with your lender.
As enticing as this feature sounds, not all is smooth sailing. The interest rate of your loan still increases even if you are not paying. While you may find a tenant to generate income during the year, you will end up paying your lender more than initially owed. This might not be the best feature when considering a mortgage for healthcare workers.
The Minimal Home-Loan Fees Feature
There’s a saying that goes something like this: “It’s the little holes that sink ships.” Likewise, in the world of finance and loans, miscellaneous fees compound into massive amounts later on and negatively affect your buying power.
This is why home loans with minimal fees are the best option for you to avoid any hidden costs. This particular loan is straightforward with its costs and takes your mind off any other charges accrued during your payments.
Application fees are just one example of loan expenses you can do without. Look for lenders and loans that do not include them in their packages.
The Offset Account Feature
Loans with the offset account feature allow borrowers to balance both their personal finances and debt payments. It essentially acts like a savings account devoted solely to paying off the loan.
We highly recommend that you transfer any extra funds to the offset account so you can pay off the interest sooner rather than later.
Make That Decision
As seen throughout this article, there are several exciting home loan features you can maximise for your portfolio. We suggest finding one that suits your financial situation best before speaking to a lender or shopping for a loan.
But if you still have any questions and concerns regarding home loans and other similar topics, give us a call this instant! We’re a mortgage broker in Melbourne that can find you the best deal that won’t break the bank and keep you financially afloat!
