Property investment loans to expand your portfolio

In the face of the global financial crisis, Australia continues to perform relatively well compared to the economies of the rest of the world.

The resource sector continues to drive growth and the dollar is holding tight and regularly reaching parity with or above the US dollar.

Experts believe that the current economic conditions represent ample opportunity for commercial and residential investment.

Investors looking to expand their portfolio may find it beneficial to explore various property investment loans options to responsibly pursue their new venture. (Linked this) Many methods of funding your investment involve using existing equity to secure a loan.

A principal place of residence (PPR) is often used as extra security to enter the property market, as it reduces the amount of deposit you are required to pay.

After you have made at least one investment, you may then have the option of a cross-collateralisation loan.

Savvy investors will know that these property investment loans use two types of equities – perhaps your PPR and investment property – to secure a single loan.

There are many advantages to a collateralisation loan, including increased borrowing power, higher loan to value ratio, less paperwork and reduced fees and charges.

The risk associated with this type of loan is that if something were to go wrong, the lender would be afforded the right to sell one or all of your properties to recoup the loan.

It can also get quite complicated in the event you decide to sell one of the properties that is in place to secure your loan.

More experienced property investors often take out stand-alone loans for each property, rather than using a PPR as security.

Potentially you could take out an equity loan against the balance of the property and use it as part of your deposit, or maybe a second mortgage on the real estate.

It is advised to speak with a mortgage broker to guide you on your best option on a loan that will suit your needs.

By Steve McKnight

Steve McKnight, the founder of PropertyInvesting.com, is a respected property investing authority as well as Australia's #1 best-selling business author.