Partner with Investment-Focused Lenders:
Not all lenders are created equal. Major banks often cap rental yields at 6% of the property price, which can underestimate your savvy investment choices. Look for lenders specializing in investment property loans who:
- Don’t cap rental yields: Let your investment’s true potential shine through.
- Include property expenses in general expenses: Streamline your finances and free up borrowing power.
- Offer negative gearing with buffer rates: Maximize tax benefits by using a realistic interest rate assessment.
Break Free from Expense Silos:
Many lenders treat property expenses as separate from general expenses, significantly reducing your disposable income and borrowing capacity. Find a lender who understands the investor’s game and includes these expenses within general expenses, boosting your borrowing power.
Leverage Buffer Rates Strategically:
Most banks add a buffer (e.g., 3%) to your loan’s interest rate when assessing your borrowing capacity for investment property finance. This is fair. However, the inconsistency lies in how they treat negative gearing. They often revert to the actual interest rate when adding back investment interest, not the buffer rate used for assessment.
Look for lenders who use the actual interest rate + buffer when calculating negative gearing. This seemingly small difference can significantly increase your borrowing capacity and open doors to more investment opportunities.
Ready to unlock your property investment potential? We are a team of investment-savvy finance brokers who can help you develop your lending strategy and navigate the complexities of investment property finance. Contact us today for a free consultation and see how we can support you on your property investment journey!