It is essential that you cover maintenance, insurance, property management, municipal and water rates, land tax, and corporate fees (if applicable) in addition to your interest payments, if you apply for a loan. Lenders are stricter than they used to be and expect a full 20% deposit. If you don't have a saved deposit, full financing of the purchase price may be an option by using your rental history as proof of savings or having a parent become a guarantor, but without capital there are more risks associated and you will be required to have full insurance. To get a mortgage loan in Australia, you need to make a cash deposit of around 10% to 20% of the value of the property.
If you want to avoid paying lender mortgage insurance (LMI), you'll need a 20% deposit. Low-deposit home loans are available, but your mortgage insurance will be much higher and you may be asked for more details about your personal finances. Some professions offer no-deposit or low-deposit loans, for example, if you're a doctor, but for most, this isn't an option. A larger deposit (20% or more) translates into lower interest payable during the life of the loan.
Some lenders will also give you a lower interest rate if you have a larger cash deposit. We also saw that there were very few properties left on the market after price increases a year ago or so, and only recently have homes come back on the market. A mortgage is a huge financial responsibility, and to get a good idea of where you stand, it's best to have an honest conversation with your accountant to determine how much you can afford. These properties will provide investors with the opportunity to increase their income and accumulate their wealth until they are ready to buy a home of their own.
You'll have a better idea of your ability to borrow and will find it easier to purchase an investment loan if you first get accredited prior approval. Because of this, it's a good idea to get pre-approved for a loan before you even begin your search for an investment property.