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Borrowing to invest is a medium to long term strategy. It’s typically done through margin loans for shares or investment property loans. The investment is usually the security for the loan. Borrowing to invest gives you access to more money to invest. This can help increase your returns or allow you to buy bigger investments, such as property. There may also be tax benefits if you’re on a high marginal tax rate, such as tax deductions on interest payments.
On the downside, investment mortgages are harder to come by. They require a higher credit score than other loan options, and they usually require a larger down payment too. You’ll also need a lower debt-to-income ratio and more cash reserves to qualify for an investment mortgage. Though these requirements vary by lender, you’ll likely need a minimum of six to 12 months of projected mortgage payments in the bank in order to be approved.
Leveraged investing isn’t for everyone and, therefore, it is important to understand all the intricacies of an investment loan. It is one of the most critical types of loans where the consultancy of experienced professionals could be invaluable.
At Ensure Mortgage, we can help you in your process to apply for every type of investment loan. Our network of well-established lenders will surely be a valuable asset for you on your journey to business investment or property investment. Our services also include helping you prepare all the necessary documents to fulfil the requirements. Call us or contact us for more info.