- 5 Oct, 2017

Cheapest investor home loan deals in October 2017

As an investor, you want to find the cheapest home loan possible as this frees up cash flow. But, with lenders tightening up their investment portfolios and raising investment loan rates, this is becoming harder to achieve. However, the good news is market conditions are still favourable for investing if you can find the right lender.

Current Market Conditions

While there is speculation the Reserve will raise the official cash rate, economists estimate this won’t occur until mid-2018. Why? Well, according to market data, housing prices are fluctuating and the market is slowing, though this is gradual. With the RBA seeking to encourage market solidity, any changes made will occur after the market stabilises. Making any sudden moves could put a strain on the economy, which the RBA doesn’t want to happen.

According to CoreLogic RP Data property prices are plateauing, with marginal growth noted. September data indicates that nationally property prices rose by 0.2%. Capital city gains were at 0.3%, while regional gains were at 0.1%. Over the quarter, price rises were at 0.5%, the slowest quarterly increases since June 2016. Nationally, property values were up 0.8% over the last 12-months.

Economists suggest the housing market is losing steam, with combined capital dwelling values rising 0.7% over the September quarter. When compared to the peak of growth, in December 2016, this rate is 2.8% lower. Though economists indicate that the drop in combined capital values link directly to the Sydney market where gains have stalled.

Why Investing Now Makes Sense

Now, if you’re asking yourself, Why do I want to invest in a slowing market? Then, you need to consider a couple of factors.

  1. Firstly, median home values have fallen. As a result, you can buy property for less.
  2. Secondly, interest rates are still very low. Therefore, as an investor you’re paying less to buy property.
  3. Thirdly, lower property prices mean needing less of a deposit.

So, given that investing is still favourable, how do you find the right lender and home loan?

Finding the Right Lender

While lenders have divided owner-occupier and investor home loans, and increased investment loan rates, bargains are still on offer. In fact, some lenders have investment loans starting around 3.79%. Of course, rates depend on many factors such as:

  • Amount borrowed – amount you need to buy the property.
  • Property price – value of the property you’re buying.
  • Loan term – number of years your loan is over.
  • Repayment type – principal and interest or interest only.

To find the right lender, it’s important to consider your financial circumstances. Thus, you need to figure out how much you can afford to borrow, what loan features you need, and the interest rate type. Other considerations are repayment frequency, your deposit size and existing assets and debts.

When looking for the right lender, consider the loan range of the product and interest and comparison rate. Also, review the repayment amount and loan-to-value-ratio (LVR), as well as fees. These will help you figure out which lender suits your purposes.

Four of the Best Investor Loans

There are hundreds of home loans on the market at any given time. So, wading your way through these is a little daunting. But, to help you narrow down your selection, we’ve pulled four of the best investor home loans out of the mix. These loans show you what is on offer and how little you can pay with the current rates.

The four best investor loans use the following criteria:

  • Rates – as of 6th October 2017
  • Loan amount – $400,000
  • Property value – $ 500,000
  • Loan term – 30-years
  • Repayment type – principal and interest
  • Loan purpose – investor
  • Repayment frequency – weekly
  • Interest rate type – variable

Ezy Economizer

The Ezy Economizer investor home loan has a loan range of between $50,000 and $750,000. This loan, offered by Mortgage Ezy, includes an offset, and redraw facility for no additional cost with a low interest rate. However, borrowers need to come up with a 20% deposit to secure the loan. This loan includes the following features:

Mortagage Ezy
Features
Interest Rate 3.79%
Comparison Rate 4.23%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Weekly Repayment $429

 

Borrowers can also take advantage of a higher LVR loan (90%) with Mortgage Ezy. However, this loan attracts a higher interest rate (4.04% with a 4.45% comparison).

Liberty Star

The Liberty Star investor home loan falls between $50,000 and $1,000,000. Provided by Liberty, this loan includes the following features:

Liberty
Features
Interest Rate 4.59%
Comparison Rate 4.89%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $295
Monthly Fee $0
Application Fee $0
Weekly Repayment $472

 

Liberty also offers other investor home loans options. Some of these loans have higher LVRs. But, these loans also attract application and redraw fees and higher interest rates. Therefore, it’s essential to weigh-up whether you want to pay more for your investment loan or come up with a more substantial deposit.

Macquarie Offset Home Loan

The Offset Home Loan range is between $20,000 and $2,000,000. Provided by Macquarie, this loan includes the following features:

Macquarie Bank
Features
Interest Rate 4.29%
Comparison Rate 4.68%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $398
Monthly Fee $0
Application Fee $0
Weekly Repayment $455

 

Other Macquarie investor loan options are available. These have varying LVRs and cater to low document, construction, and line of credit loan types. If you feel that a different type of loan will suit you better, then discuss your options with a broker before applying for a home loan.

St George Basic Home Loan

The Basic Home Loan has a loan range of between $150,001 and $1,000,000. Offered by St George, this loan includes the following features:

St George Bank
Features
Interest Rate 4.19%
Comparison Rate 4.20%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
Annual Fee $0
Monthly Fee $0
Application Fee $0
Weekly Repayment $450

 

Do you want to know more about the cheapest investor home loans? Then contact eChoice, we can help you find out what loans you qualify for today. Plus, our brokers have access to 100’s of home loan products. So, we’ll find you the right mortgage.

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Things you should know:

This information does not constitute as financial advice. Terms and conditions, fees and charges and normal lending criteria apply. Information & interest rate is current as at 6th October 2017 & is subject to change. The comparison rate is based on a loan amount of $150,000 over a loan term of 25 years. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.


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