I recently came to a bit of money, and my thought was that if I put some of that money aside and saved up some more, I could use it as a deposit on an investment property down the track (but not too far away because the reason I'm thinking about it is largely because the market is so good right now).
One of my questions is, do the same rules apply to investment properties when it comes to qualifying for a bank loan as it does for a normal home that you're occupying? The reason I ask is that we are almost finished building our first home now, and we can afford the repayments of about $480 a week, but because we are low income earners, we wouldn't qualify on paper for another loan with repayments of say $350 a week, totaling $830 per week in repayments. So when you apply for a bank loan for an investment property, does the bank take into account that you will be getting a 80-100% return on your investment once you've rented it out, or do they still need you to be able to pay both mortgages as if you were not renting the second one out?
Secondly, are there any different rules about deposits for investment properties; could we apply for a loan with a 10% deposit like with a normal home (assuming the bank allows low deposit loans)?
Lastly, how does equity work? Say we need a $30,000 deposit and we wanted to use our current home as equity instead of a deposit; do we have to wait until the loan has been repaid by the amount we want to put against the new property ($30,000 in this case), is that how it works? Are there any other rules in terms of using your home as equity for another property?
TIA for any helpful replies!
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