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Investment Loans: 5 Strategies to increase the size of your deposit

It is important to have a strategy for your investment loans to reap the rewards in future

Investment Loans Strategy 1: Get Serious

With investment property loan deposit requirements for homebuyers often around 20 per cent of the purchase price and proof of a personal savings history a common requirement for securing a loan for investment property, a real saving strategy has never been more important for homebuyers.

Saving money however is not easy; it takes self-discipline, dedication and above all determination. Only by knowing exactly what you want are you going to be able to get there. So the first place to start is with a plan; set yourself some goals and know exactly what you want out of your investment property loan and when you want it. The clearer the goal for an investment loan, the easier it will be to attain.

Becoming a serious saver requires a real change of attitude. You're going to have to be prepared to go without some of the things you're used to if you want a loan for investment property.

But rather than thinking about what you're missing out on, think about what you're gaining from your investment property loans.

Yes you may have to start skipping Friday lunches at the pub, but you’re on the path to owning your very own investment property through an investment loan. Tell yourself this regularly.

Savings Tip for investment property loans:  Keep your eyes on the prize with a reminder of your goal firmly in sight, such as an image of your dream home on the bathroom mirror.


Investment Loans Strategy 2: Know Your Finances

It's impossible to manage your money if you’re not monitoring where it's going so take the time to really analyse your cash flows before you get an investment property loan. A great way to do this is by monitoring your spending for one month, both fixed and discretionary. Write down exactly where your money goes each day - you may be surprised on where a lot of your money is being spent. From here you'll be able to determine exactly where you can reduce costs to bolster your savings potential as well as what a realistic savings plan will be for your investment loan.

Once you've determined how much you'll be able to save, create yourself a monthly budget, or financial plan. This is the only way to manage and maintain control of your money before you apply for investment property loans. If you're looking for some guidelines jump online; there are many websites offering budget templates and calculators.

Savings Tip investment property loans: Be realistic. You can't take all of the fun out of your life or you're likely to wind up depressed and exasperated. Set aside a small allowance each month for those special things you really enjoy. You should still be able to get a loan for investment property if you allow yourself these treats.


Investment Loans Strategy 3: End Debt

If there's one thing that can really get in the way of saving for an investment property loan its debt.

The interest paid on credit cards and personal loans can easily strip away any savings and makes achieving your goals for your investment loan much harder and slower.

So reduce and eliminate any personal loans and credit cards before saving for investment loans. And before you say sometimes you just need a credit card... don't. There are plenty of debit card facilities now available that serve like a credit card but only take money you already have - a much safer option.

Savings Tip investment property loans: Look for alternatives to credit cards if you don't have the cash up front. Lay-by for instance is a great solution when it comes to shopping. And for larger purchases, such as holidays or dental visits, ask about paying by installments. You may be surprised at your options. Eliminating debt is a key factor in getting investment loans.


Investment Loans Strategy 4: Automate

When it comes to putting away money, the best way to do this is by taking it out of your hands. Set up an automatic savings account that will withdraw and set aside your chosen amount every week/fortnight/ month making it much easier for you to stick to your budget for an investment loan. There is a wide range of savings accounts currently on the market so check out what your bank can offer you but also take a look on the internet. There are a lot of lenders offering competitive interest rates on online savings accounts, many with attractive offers for new customers.

Savings Tip investment property loans: When choosing your account don't forget to check how often interest is calculated and how often it is paid. While putting money away will help you get ahead, it's the interest on your money that can give you a boost.


Investment Loans Strategy 5: Evaluate

Revisit your savings plan regularly. If you're struggling don't give in, simply adjust. Perhaps you've been a little too ambitious. If you encounter some unexpected costs that mean you can't meet your regular goal one month, don't be upset or disillusioned, that's life. Simply get back on track the following month.

On the other hand, if you're finding your savings plan a little too easy and you feel you could do more for your investment property loan, then do so.

Savings Tip investment property loans: Remember, saving takes time so don't be disillusioned if it doesn't feel like you're getting anywhere. Create smaller goals so you can celebrate milestones along the way so it feels like you're getting somewhere.

Want to get started on getting your loan for investment property? Download our Assist Kit to get started.


DISCLAIMER: This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.


Don Crellin

General Manager, Resolve Finance
Don Crellin brings a wealth of knowledge and experience to the company. With over 25 years of experience in the mortgage industry, he joined Resolve in 2007 after leaving ANZ, where he was a member of the Senior Executive Team. Don’s experience spans both the Australian & New Zealand mortgage markets.