Buying an investment property

Where do I start? 

Buying an investment property can be a great way to invest in your future. As with any investment, doing your research and setting clear goals on what you want to achieve beforehand can save you a lot of money and stress in the long term.

Talk to one of the team and find out how we can help grow your property portfolio. We’ll help you understand your obligations so you can make an informed decision. We can also help with options on how to manage an empty property. 

 


Types of investment properties

An investment property is any property where you earn a rental return for at least six weeks of the year. This may include a holiday home that you rent out when you are not using it yourself.

 

Types of properties include
  1. A residential home to rent out permanently (including apartments etc)
  2. A Holiday home/bach rented out when not in use

 

 

What makes an ideal investment?

  • Is the property in a location that will be easily tenanted?

    Small towns can offer up enticing property prices for investors, but you’ll need to weigh up if you’ll be able to keep the property tenanted if there are limited work opportunities in the area.

  • Is the property type suitable for people living in the area?

    A one bedroom apartment zoned in a popular school zone may not be as appealing as a four bedroom family home. Local real estate agents can provide information on the demographics of certain areas and knowledge on what properties are being tenanted quickly.

  • Are there any future developments planned for the area?

    A new school, transport option or conveniences such as supermarkets can all play a role in keeping your property easily tenanted, and help to determine the rental prices you can get. Developments can also hinder investments – such as highways/motorways being built close by so it’s important to be well informed on council plans too.


What can I borrow?

Getting an idea of how much you can borrow is the first step to buying an investment property. You’ll get a general idea of your price range, so you can narrow your property search within your budget.

Whether you’re choosing from a residential investment property, or even a holiday home, there is ample opportunity to invest. When assessing how much you can borrow, we’ll take into account the potential rental income you will get.

Generally, you’ll need a 35% deposit. This may be from either cash, leveraging the equity in the home you live in or another property you own.


Things to check

Before you enter into negotiations for any property, ask questions like
 

  • Has it been rented before?

  • How much was it rented for?

  • Have there been any vacancy periods?

  • How long it was vacant for, and why?


Once you’ve found the ideal investment property, you’ll need to organise the relevant insurance, including building and landlord protection. You may also want to organise a property management service to manage the tenancy on your behalf. This is especially helpful when you live in a different region to your investment property.


Structuring your loan 

Different repayment and loan options will suit different investment strategies.

Talk to one of the team to find out what loan option would work best for you.

 

  • Table loan

    A table loan is the most common type of home loan. You can choose a term up to 30 years and be on a fixed or variable interest rate. With a table loan your payments are the same and spread evenly over the whole term of your loan (subject to interest rate changes).

  • Revolving Credit loan

    A revolving credit works like a large overdraft and is a flexible choice for those who are disciplined with their spending. You can pay down the loan then re-draw what you have repaid, up to the loan limit. Revolving credit loans are only offered on variable interest rates.

  • Interest only

    Interest only keeps your repayment amount down as you aren’t paying any money towards the principal of the loan. Not all investment loans will meet the criteria required to pay interest only so you’ll need to check with the team if you’re eligible. A interest only loan can’t be extended past your initial loan term.

  • Fixed rate

    The interest rate set is set for a term of your choice (ie: six months to 10 years), so you can be certain of how much your loan will cost you over that period. For new lending, fixed rates can be held for up to 60 days once your loan is contracted.

  • Floating rate

    A floating or variable interest rate moves with the market, decreasing your repayments when interest rates are low, and increasing them when the market rates are higher. If you’re looking to pay off your home loan faster, a floating or variable rate allows you the flexibility to increase your repayments or make extra payments without any penalties.

  • Combi-loan

    The best of both worlds – part-floating, part-fixed – and you decide how much of each. You have the certainty of a fixed rate as well as the flexibility of a variable rate.

  • Frequency

    Choose from weekly, fortnightly, monthly or quarterly payments.

 

 

Things to think about

Brightline Test

If you buy and sell a property within five years, the brightline test is used to determine if you are required to pay tax on the profit. If you own more than one property, only one is able to qualify as your main home. Any other properties you own would be subject to the brightline test when you choose to sell.

Loan to Value Ratio (LVR)

The LVR restrictions may impact on your ability to purchase an investment property. If you’re buying an investment property secured with a mortgage, you will need a deposit of at least 35%.

Landlord’s insurance

Arranged by TSB in conjunction with TOWER, Landlord insurance protects you from the risks of renting your property. From deliberate damage caused by tenants, to cover for whiteware and window coverings. Make sure your investment is protected.

 

 

Your home loan options

 

Home Loan Special Rates

YOUR RATE

Whether you’re after the certainty of a fixed term, the flexibility of floating, or a combination of both, we have a range of competitive rates to offer.

HOME LOAN RATES

tsb home loan house

YOUR HOME LOAN OPTIONS

When it comes to loan type and repayment plans, one size doesn’t fit all. Enjoy the freedom of a revolving credit, or make budgeting easier with a fixed home loan - whatever works best for you.

LOAN & REPAYMENT OPTIONS

tsb home loan calculator

YOUR REPAYMENTS

Align your repayments to suit your lifestyle, whether it's weekly, fortnightly, monthly or quarterly. Use our home loan calculator to see what your repayments could be.

HOME LOAN CALCULATOR

 

 

Manage your home loan

With a little planning and some helpful home loan tools, you can shorten the length of your loan term, reduce the amount of interest you pay, and save money in the long run.

See how our home loan features can help you pay off your loan sooner.
 

We’re here to help

If you’re unable to make your regular payments and are facing unforeseen hardship, there are options available to assist you through difficult times.

 

 

StepUp
Automatically increase your repayments by a small amount each year.

 

 

 

Chat to us today

 

 

Save time - start your application

Download the application form below, fill out what you can and email it to emailsupport@tsb.co.nz. We’ll then contact you for any further information we might need and to discuss the next steps. You can also make an appointment with your local branch, give us a call on 0800 872 226 or let our Mobile Mortgage Managers come to you – whenever and wherever suits.

When you’re ready to talk with one of our team, you’ll need to provide us with the following to assess your loan application:

  • Evidence of your income if your wages aren't deposited directly into a TSB account (three months’ bank statements and your two most recent pay slips).
  • Or, updated financial statements for the last two years if you're self-employed.
  • Three months of statements for any credit cards, hire purchases or personal loan facilities.
  • Photo Identification (Driver’s License or Passport - these may need to be certified).

If we need more information or additional documentation, we’ll let you know what else you need to bring along.

 

GET STARTED
application form MESSAGE US
  • Don’t forget to read this bit

    Terms and Conditions – refer to the terms and conditions of your loan. Take a look at our Disclosure Statement or grab a copy from your local branch. TSB’s current assessment lending criteria, lending terms and conditions, interest rates and fees apply. Use of accounts and services are subject to TSB’s General Banking Information.

    1. Offer available from 20 August – 13 October 2018 for loans relating to residential properties only. Additional interest rate margins may apply for bridging loans and buyers with less than 20% deposit (including Welcome Home loans). Loan must be contracted during the campaign period and drawn down within 60 days of contracting. Offer can be withdrawn or amended at any time. All interest rates are subject to change without notification. TSB’s current account opening criteria, current lending criteria, terms and conditions, fees and interest rates apply. 

    2. Use of ATMs not owned by any bank in New Zealand may incur a service fee (in addition to standard account transaction fees) for which TSB receives a commission.