Citywide Lending acknowledges the risk associated with investment. It then highlights that the most important component to your quest for the right investment loan is the broker. Citywide Lending will find the right loan type for you, assessing your wants and needs, and the market, through the lense of future financial security.

When considering an investment loan, you must consider the risks that may be associated with:

• Investment income : Unfortunately, not every investment is a fairy tale at first. There are moments when the income received from the investment is lower than the expected return. Citywide Lending can ensure that you forecast this and places funds aside to cover any defaults which may be encountered by your investment.
• Selected interest rate : It is more than probable that interest rates on investment loans could change. Citywide Lending provides expert advice regarding the possible solutions to any surprise interest rate rises, allowing for ways to still meet the loan repayments, to avoid the risk of default.
• Ongoing market changes : Investment loans are ultimately for financial growth and at times, many clients rely on this return and assume that it is lifelong. It is not uncommon that, pending on the ever-changing economy, the value of an investment may decline, causing issues such as inability to pay the remainder of the loan. Citywide Lending asses the type of investment you pursue and offer professional advice, in consideration of future market projections.

Often always, applicants miscalculate the implications of investing and fail to understanding the ongoing implications of them. Citywide Lending aims to ensure that you, the applicant, understand the associations of committing to an investment property, especially if it is for the first time.

Important factors for you to consider when considering an investment are:

• Any current loans you may have
• Stability and ability of repayments
• The amount spent on your investment
• The amount needed to be borrowed
• Expenses associated with the investment property
• Option to pay ‘interest only’
• Any application fees
• Ability to make extra repayments
• Risks involved

Each and every application accounts for various factors which contribute to the overall structure, and ultimately the success, of your loan. It is essential that whenever you are on the lookout for finance, you aim to optimise the return on the value of the asset. A few things to lookout for when purchasing an investment include:

• Loan-to-value (LVR): Used by lenders to compare the loan to the value of an asset, the LVR represent the loan as a percentage to the value of your soon-to-be property. Investment loans often require a higher LVR, meaning that as an investor, a higher deposit is needed before applying for the loan.
• Interest Rate: Knowing the structure of your rate is commonplace, however, understanding the implications of both fixed and variable rates is crucial, as it affects overall return in the long run. This includes understanding the loan time and competitive current rates.
• Loan term: The time it will take to repay the loan is important in terms of understanding how compounding interest may take a toll on your finances. Compromising payments, whether fortnightly, monthly, etc. are all dependant on individuals and can contribute significantly to the duration of your repayment time.
• Loan Type: Various loans means various options when it comes to selecting an appropriate finance lender. Understanding Interest Only loans and Principal and Interest loans can impact the loan period, overall loan amount and return on investment in the long run.
• Expenses associated with your investment property: Investments can increase your wealth in a tax-efficient way. In accordance with legislation, many expenses made on your investment property can be claimed as tax deductions.

Documentation is extremely important regarding transparency of the application from the applicant. As regulated by the Australian Prudential Regulation Authority, particular rules and regulations are in place regarding each type of application when gathering data, and are thoroughly examined to ensure that you make the perfect candidate for an investment loan. When preparing to gather documentation for a loan, look to gather information regarding:

• Personal:
  • Personal details
  • Annual Tax statements
  • Salary/income
  • Bank Statements (minimum 3 months)
  • Assets + liability statements

• Company
  • Company details (extracts)
  • Net profit from previous financial year
  • GST registration
  • Bank Statements
  • Tax portals
  • Assets + liability statements