Property Investment
Whether you’re considering buying your first investment property, or you’re building up your portfolio, getting the right home loan advice to help you maximise the performance of your investment is critical.
- Are you looking to repay only the interest to maximise negative gearing?
- Or do you want to pay off the loan as quickly as possible?
- Are you planning to use the equity in your home as a deposit?
When you meet with your local Mortgage Choice broker you’ll get all the specialist home loan help you need, taking you through the whole home loan process step by step.
Your broker will use our Loan Qualifier software to quickly and effectively compare and contrast hundreds of different home loans from a wide range of lenders to find the investment loan that best meets your objectives. To further help you along your property investment journey, we've put together some property investment tips.
It can be a complex area, but your Mortgage Choice broker is there to help. Make an appointment or apply online today, it’s that simple.
Benefits of property investment
Investment property, or rental property, can deliver ongoing rental income plus long term capital growth. If you hold onto your property for a significant amount of time, you may be able to sell it for a lot more than you originally paid for it.
Property investment can also be a very tax friendly investment. You may achieve personal tax savings through negative gearing, and if you hold onto your property for over 12 months before you sell, the capital gains tax payable will be calculated on 50% of the profit rather than the total profit.
Unlike some other investments such as shares, you have more control over your investment property. You may add value to it through things such as renovations, which could mean you can charge a higher rent and your property may be worth more if you decide to sell.
Downsides of property investment
Property is quite a high maintenance investment. Like your home, your investment property requires ongoing maintenance, which can be expensive, though the cost can usually be claimed as a tax deduction. Investors should also allow for vacancy between tenancies.
It is also a very ‘illiquid’ asset, meaning unlike cash deposits or shares, it can’t easily be converted to cash. In the event where you need access to funds in an emergency, you’ll have to sell the entire property – you can’t simply sell off one bedroom. And selling a property can take weeks or even months depending on market conditions.
However, this downside isn’t as significant as it once was because of the flexibility of today’s mortgages. Today, there are a number of products that enable you to access funds that are tied up in property. You may be able to withdraw extra repayments made on your loan via its redraw facility, or even refinance the mortgage if you need access to additional cash. Your mortgage broker is the best person to help you navigate through the maze of products available to achieve your specific goals. Contact your local Mortgage Choice broker today to find out how we can help.
That said, it is a good idea to always maintain a separate pool of cash to give yourself a financial buffer. If you have a loan on your own home, the financial buffer is probably most financially effective if it sits in the home loan account as extra funds (accessible via a redraw facility), or in an offset account attached to the home loan. Both strategies work in the same way - reducing the amount of interest owed while the financial buffer sits there.