How much deposit do I need for an investment property? It’s a question we hear a lot here at No1 Property Guide, and it’s something many people aren’t sure of. Most lenders and experts will tell you that you need a whole 20% deposit. While others might say you should be saving up to even 40% in some cases!
But what’s the actual truth? The facts are, it’ll depend on your own financial situation, as well as the kind of investment you’re looking at. Of course, where you want to buy an investment property plays a part as well.
At No1 Property Guide, we specialise in no or low deposit house and land packages. So we know what it takes to get into the investment market without the large deposit most lenders require. In this article, we’ll go over exactly how much deposit you will need to get an investment property. As well as your options if you don’t have a deposit ready to go.
Or, if you’re ready to start your property portfolio right away, fill in our simple pre-qualification form and one of our Investment Specialists will be in touch to guide you through the process.
Investment Methods
The first thing you’ll need to know are the various investment methods you can use. Each method has its own pros and cons. And the deposit amounts mortgage brokers require will vary slightly depending on which one you want to go with.
In Australia, you have 3 main property investment options:
- Equity
- SMSF
- Rentvesting
If you want to know more about these, we cover them in more details in our ‘how to buy an investment property in Australia’ article here.
When it comes to the different methods, it will depend on a few factors. Like whether you have a house or property that has equity, how much Super you have, or whether you meet the lender’s requirements to Rentvesting.
Generally, we recommend either equity or SMSF investing as the best choice for our clients. These options tend to be the most flexible. And they provide the greatest chance for breaking into the property market without putting a large financial burden on yourself.
Of course, everyone’s situation is different, which is why we assess every client individually. Darren Walters’ unique pre-qualification system allows our Investment Specialists to find all your factual options without impacting your credit history or leaving a mark on your name. Once you have all the information, you can make an informed decision around which investment option works best for you.
20% Deposit with Traditional Lenders
When it comes to traditional lenders, you’ll usually find they will require a 20% deposit to get an investment home loan. While most banks and big lenders will consider investment loans high value, they’re also high risk.
Some of the biggest risks banks will consider are things like:
- The investor prioritising paying their main mortgage over the investment loan during financial hardship
- Struggling to evict tenants & risking damage to the property in the event they need to sell
- Possible downturn in the market affecting the sale price
Because of these risks, many lenders will actually require more than a 20% deposit to ensure they can still make a return if you default on the loan.
On the other hand, some lenders are willing to go down to a 10% deposit in some cases. But these usually require you to have proof of previous successful investments. Or substantial equity in your home or commercial property.
On the other hand, some lenders are willing to go down to a 10% deposit in some cases. But these usually require you to have proof of previous successful investments. Or substantial equity in your home or commercial property.
If you have a 20% deposit saved up, then you’re in luck! You most likely have plenty of options and can get an investment property. Though there are other criteria you’ll need to meet that could potentially stop you from getting into the market.
However, if you’re like most potential investors and don’t have the large 20% deposit required, you’ll need to find an alternative. That’s where No1 Property Guide comes in. By utilising Darren’s system, we’re able to get renters and potential investors into the property market with a low, or even no deposit.
No or Low Deposit with No1 Property Guide
At No1 Property Guide, we specialise in helping people enter the market when big banks and traditional lenders won’t help. By individually assessing your situation, we’re able to discover all your factual options. We’ll then present you with investment options that can help you get your first, second or even third investment property. All without needing to save a 20% deposit!
Darren’s unique pre-qualification system, combined with his specialised no or low deposit system, means we can help you get into the property market even when you don’t have a deposit.
We understand that everyone is different, and your situation may not be the same as the next person. That’s why our Investment Specialists take the time to assess every client individually to find the best solution. We’ll walk you through your factual options and allow you to make an informed decision on your next steps.
Happy Clients
Would love to give a BIG shout out to Darren Walters – No1 Property Guide and his amazing team, Leon, Caleb and Clay. Thanks to them they have literally made my dream come true. I have just been unconditionally approved to build our first home. Thank You. I never thought this would happen considering I am a single parent but with their support and guidance they made the entire process a delight. The whole team was professional, informative and efficient. I would especially like to thank Clay as he was just a joy to deal with and walked me through every step. I look forward to their continued support throughout the remainder of this process.
I highly recommend Darren Walters – No1 Property Guide and his amazing team
Today we received news that we have been unconditionally approved for the loan to build our two story home with pool.
There are no words to describe how much this has changed my families life.
Unlike banks and traditional lenders, discovering your options doesn’t require a credit check at No1 Property Guide. In fact, we’re able to calculate your borrowing capacity and start discovering your investment options with only your:
- 2 most recent payslips
- Most recent Super Statement
- Most recent Income Statement
- Family Tax Statement (if applicable)
Using these, our Investment Specialists will be able to discover all your factual options. Then we can help you get started on your investment journey.
Understanding Your Options
At the end of the day, understanding your options is the most crucial part. Without understanding what you can or can’t do, you’ll never be able to answer, ‘how much deposit do I need for an investment property?’
Whether you think SMSF investing is your best choice, or you’re considering utilising the equity in your home, without knowing your borrowing capacity, you’ll never know what you truly can or can’t do.
If you’re ready to begin your investment journey or want to know how No1 Property Guide can help you get into the market with no or low deposit, then fill in our pre-qualification form or contact us today.
Leave a Reply
You must be logged in to post a comment.