You wouldn't try to get a game of footy started with a cricket bat, so why would you try to buy investment property in New Zealand with the wrong type of loan?
All home loans are about getting the money you need, but different loans serve unique purposes.
For instance, if you were looking to build your dream home from scratch, chances are you'd be in the market for a construction loan. However, if you want to start reaping the rewards of a rental property, it's time you start thinking about your investment loan options.
Make your loan work for you
Investment loans can come in all shapes and sizes – the one that will work for you depends on what you're trying to achieve.
Sometimes a standard home loan may do the trick, but if you're trying to obtain certain tax breaks, gear your property in a complex way or are hoping to repay your loan faster, it pays to focus on the different types of features investment loans can have.
Say you have a sizeable amount of savings. By adding an offset account to your mortgage, you can reduce your loan interest expenses with the interest building on your money in the bank.
Or maybe you're hoping to own a residential investment property in Hamilton free and clear. A mortgage that allows you to make extra repayments will be up your alley, and unlike with traditional loans, you won't have to worry about paying an early exit penalty fee.
When selecting the right loan for your property investment purchase, it can help to think of your mortgage as a tool. Every job requires the right instrument – anyone who's ever found themselves without the right wrench or screwdriver can attest to that.
So think about what your property investment goals are and pursue a home loan that is tailored to those specifics.