A Pure Rental Income Loan, also known as a Rental Income Loan or Investment Property Loan, is a type of mortgage loan that specifically focuses on the property's rental income potential. This type of loan is designed for investors who purchase investment properties with the intention of renting them out and generating rental income.

Benefits of a Pure Rental Income Loan:

• Higher Loan-to-Value (LTV) Ratio: Pure rental income loans often have a higher LTV ratio, allowing borrowers to access more funds for property purchases.
• Lower Deposit Requirements: Some lenders require a lower deposit for pure rental income loans, making it easier for investors to secure a loan.
• More Flexible Lending: Rental income loans may have more flexible lending requirements, as lenders consider the property's rental income potential rather than just the borrower's credit history.
• Tax Benefits: Rental income can generate tax benefits, such as depreciation and tax deductions, which can be used to offset mortgage interest payments.

• Loan Application: Borrowers apply for a loan using their rental income to qualify for the loan.
• Rental Income Verification: Lenders verify the rental income by reviewing the property's rental agreements, income statements, and tax returns.
• Loan Amount: The loan amount is based on the rental income, with a higher rental income typically resulting in a larger loan.
• Interest Rate: The interest rate may be based on the loan-to-value ratio, with a higher LTV resulting in a higher interest rate.
• Loan Term: The loan term may be longer than standard residential loans, typically ranging from 15 to 30 years.

• Rental Market: The rental market's demand and supply can impact the property's rental income, which affects the loan terms.
• Rental Property Management: Borrowers must be prepared to manage the property effectively to maximize rental income and minimize vacancies.
• Tax Implications: Borrowers must understand the tax implications of rental income, including depreciation and tax deductions.
• Insurance Requirements: Lenders may require borrowers to purchase special insurance for investment properties, such as rental income insurance.

• Vacancy Risks: Rental vacancy risks can impact the property's rental income, leading to reduced loan payments.
• Market Fluctuations: Changes in the rental market or local economy can impact the property's rental income and loan terms.
• Maintenance and Repairs: Borrowers must budget for maintenance and repair costs, which can reduce the property's cash flow.

• Rental Income: Lenders require minimum rental income thresholds, typically around $2,500 to $5,000 per annum.
• Credit Score: Borrowers must have a good credit score to access a pure rental income loan.
• Deposit: Borrowers must provide a deposit, which may be lower than standard residential loans.
• Inspections: Lenders may require property inspections to verify the property's condition and rental income potential.