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What’s Involved – Home Loans – Investor

In the section “Need a Loan – Home Loans – Investor”, we covered some key things to know about applying for an Investor Home Loan.

An Investor Home Loan is where the borrowers will not occupy as their prime full time residence the property being used as security.

Here we will cover key aspects of what is involved in applying for an Investor Home Loan and what the applicant needs to know.

Loan security

Investor loans are almost always secured by a first mortgage over a residential property.

Lenders have internal “Postcode” restrictions indicating the acceptable postcode locations that lender will accept as security. On occasions whilst the security may be acceptable, limitations on the maximum loan value may apply due to reasons of location, high density positioning, age or condition of the premises or other reasons.

Prepare your budget

It is vital ahead of time to assess your financial situation and preferred standard of living when deciding how much you can comfortably afford to repay to an investor home loan.

You need to take into account;

  • your present circumstances and financial commitments;
  • any future plans that will impact your finances;
  • major changes to your family situation such as starting a family; and
  • other possible changes, such as interest rate rises, sickness, unemployment and or fluctuations in rental income on an investment property.

Remember when preparing your budget to take into consideration all the costs of buying an investment property, including:

  • legal, and settlement agent fees;
  • government charges, such as stamp duty and other taxes;
  • lender loan establishment and other loan fees and charges;
  • building and pest inspection fees;
  • insurance (building and contents);
  • property rates and taxes; and
  • renovation / furniture cost for the new investment property.

For assistance to prepare your budget please contact us or check out ASICs website - MoneySmart.

Supporting Documentation

It's essential ahead of time to prepare a number of documents required by lenders to support your home loan application. The following is a list of potential supporting documents that the lender may request;

  • last 3 payslips;
  • last tax return or group certificate;
  • letter form employer confirming allowances, overtime etc;
  • latest 3 or 6 months’ bank account statement;
  • latest 3 months’ credit card statements;
  • latest 3 months’ loan statements;
  • copy latest home insurance certificate on existing property;
  • copy of new insurance corticated on new investment property;
  • copy latest shire rates notice on existing property; and
  • copy of letter from real estate agent confirming new rental income on investment property;

Our team will happily work with you throughout this process to identify the documents required by the lender.

Special note:

Lenders will not commence assessment of any loan proposal until all the correct supporting documents are provided. Any time a lender identifies missing documents, they will suspend the application for 5 working days and only then will the file be picked up for re-assessment.

Need an Investment Home Loan

More information from MoneySmart

For more infor4mation regarding what is involved in applying for an owner occupier home loan contact us.

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