Low Deposit Property Investor Loan

Low deposit investment property loans are often very popular amongst residential property investors who are purchasing residential property for investment purposes.

Many proponents of this strategy claim that minimising the amount of equity tied up in an investment property enables a property investor to maximise their leverage and potentially acquire more property than would normally be possible.

Generally the theory behind "maximising leverage" in a property market is that the more property that is held in times of increasing property values then the potential capital gain that can be achieved is greater, provided the properties are in an area that is increasing in value.

This capital gain could be drawn upon to then again  purchase more investment property and further increase the leverage and resultant exposure to further property value increases.

Property values need to increase at a level that will also cover the costs of the finance otherwise there could end up being a negative return on the investment.

Property prices that do not increase or property prices that even decline for some time could also result in a negative return.

There may be some taxation benefits realised as well and this really should be discussed with a professional accountant or tax planner.

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