Investment properties on average have a higher interest rate for the investment loan than a traditional home loan interest rate, but one lender is now offering a combination loan where both the investment property and the owner-occupied property receive the same low interest rate.
What is a combination loan?
A combination loan is where the borrowers have both an investment property and an owner-occupied property and secure the same low interest rate for both properties by packaging both properties with the one lender.
The lender will offer a lower interest rate for both properties, if the borrower provides both the investment property and owner-occupied property as security and meets the lenders minimum requirements.
Often these offers are for a short time to boost the lender’s portfolio, so when they do become available it’s worth considering how the low rates might help reduce the costs of the investment property.
Combo loan 3.49% pa P&I repayments
The lender offering this combo promo is offering a variable interest rate of 3.49% pa on Principal & Interest repayments for loans above $750,000. The owner-occupied portion must be at least 25% of the total loan.
Combo loan 3.89% pa Interest-only repayments
For those wanting interest-only repayments, the lender offering this combo promo is offering a variable interest rate of 3.89% pa on interest-only repayments for loans above $750,000. The owner-occupied portion must be at least 25% of the total loan.
How much will I save on my investment property loan?
Traditionally, investment property loans are currently 0.5% to 1% higher than an owner-occupied property home loan, depending on the lender you choose.
For example, investment property loan interest rates with CBA are 4.24% pa for P&I repayments and 4.98% for interest-only repayments. Other major banks like NAB are 4.56% for P&I repayments and 5.09% for interest-only, so you can see there is a big difference between lenders.
By switching a $600,000 from a NAB investment property loan of 4.56% down to the combo loan offer of 3.49% on a 30 year term with P&I repayments, the borrower save $371 per month, equating to $4,452 for the full year. Now that’s an extra $85 per week in the back pocket – and for investment properties, every dollar counts!
How to get a combo loan?
For any refinancing or purchases, it’s always best to seek the guidance of your mortgage broker. Mint Equity is a multi-award winning mortgage broker specialising in home loans and investment loans. For more information on any of the interest rates mentioned in this article, contact us.