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Investment Loans: The Pros and Cons That You Need To Consider

Investment loans are popular among the public. But deciding which type of investment loan you’ll place your hard-earned money can be tough. It can be one of the toughest decisions to make in your life since you are looking out for your future.

Types of Investment Loans

A good investment loan can help you in purchasing investment properties which can, in turn, give provide you income and use it to help pay off the loan. An investment property can be a residential, commercial, or industrial property.

Take a look at the following types of investment loans.

  • Principal and interest – one of the easiest and simplest loans to get. Principal and interest loans are ideal for most people because they can use the loan to purchase an investment property, for example, with the intention of paying off the loan so they can own the property over time.
  • Interest only – a type of investment loan preferably sought by investors who only want to pay off the interest which is also tax deductible.
  • Line of credit – a type of investment loan wherein a bank will only give an investor a maximum loan amount of the property that secured the loan.

Keep in mind that investment loans have different complexities. You need to choose which type of investment loans based on your goals or what you’re trying to achieve. In this case, you’ll need the help of a mortgage broker to choose the right investment loan for your goals.

Pros of Investment Loans

  • You can earn income from having tenants rent your investment property.
  • You could earn from capital growth, especially if you purchased the investment property for a very good price and its value increases.
  • Interest on most investment loans are tax deductible.
  • Investment loans like investment property loans are less unstable than shares.
  • With investment loans, you can purchase investments with a physical form that you can see and touch.

Cons of Investment Loans

  • You may earn income from investment properties in the form of rental payments from your tenants, but this won’t be enough to pay for all your monthly mortgage payments. This means that you’ll have to reach out from your pocket to help you pay your monthly mortgage.
  • You can become a slave to the property market. If the property market goes down, your investment will also go down.
  • High-interest rates can affect your returns and your current finances as well
  • You can’t also share a section of your investments if you are in need of quick cash, unlike shares.

Understanding the structure of investment loans is very important, especially if you’re looking to invest in properties or other assets. So take a moment to consider the pros and cons of investment loans mentioned above before you decide on one. By being aware of these pros and cons, you should be able to choose the right investment loan for you without any worries.

If you need help in securing an investment loan, consult a mortgage broker who can assist you in making one of the most important decisions in your life. There are many mortgage finance brokerage firms available out there, but one of the most dependable on them is Loan Base. Loan Base is dedicated to assisting you in choosing the right investment loan for you. Go to loanbase.com.au to contact them now.


Jordan Richardson

Jordan is a professional finance and business expert who specializes in loans and other key areas of business. He also contributes Loanbase. Jordan works hard to research and find the best business solutions for clients to ensure the very best results. In his spare time he enjoys spending time with his family and friends.