High Interest Investment

why are interest rates higher on investment properties?

Public Comments

1. If you are living in the house they feel you will maintain it and make your payments. If you are renting it the tenant may run it down then leave and without the rent you might not be able to make the payment. A slightly higher risk so a slightly higher interest. They usually want a bigger down payment too.
2. Lenders always charge higher interest rates to compensate for higher risks. The risks of not getting all or most of their money back, that is, your repayments plus principal.
3. If you are an investor and everything went south and you had to stop paying the bills.... which bills would you stop paying first, your home or the investment home? That is another factor that increases the risk besides the fact that a renter wont keep the value up like an owner would on average. And percieved risk is directly related to the interest rate you can attain.