Investment Property Research | Gymea, Cronulla and Sutherland Shire
If you're anything like me, the more you think about where to buy the best investment property the more confused you become. Sure, you could buy in your local area and get lucky. You might also follow the general consensus and buy in a "boom" town and suffer massive losses which are hard to ever recover from. However, if you really want to success, you need to do the research and understand the various investment strategies and loan options.
So to help you get started with your investment property research, we have outlined the different loan options available below. Otherwise, for more tailored advice, we highly recommend for you to reach out to our team of Mortgage Brokers in the Shire. They will suggest the type of loan which is best suited to your individual situation, goals and of course your budget.
Many investors choose to fix their mortgage interest rate. With a fixed-rate loan, the annual interest charge for each year is known upfront. This means landlords can prepay up to 12 months of interest each year - a cost that may be claimed as a tax deduction.
This can be a way of evening out your tax bill in years when income from other sources (such as wage and salary payments) is higher than normal.
The success of this strategy hinges on having sufficient cash to prepay interest, and it’s always sensible to speak with your tax advisor to ensure you can claim the full interest charge as an expense in the current tax year.
Unlike most other loan types, interest-only loans involve payments that solely include loan interest - there is no repayment of the principal. The principal is repaid when the property is sold. As some investors aim to make a profit on the sale of the property rather than eventually owning it outright, an interest-only loan can be appealing for landlords.
This type of loan offers two key advantages - first, the monthly repayments are usually less than for a principal and interest loan. Secondly, all your repayments are tax-deductible as they don’t involve capital repayments of the loan. Most loans permit interest-only payments for a limited period, generally up to five years.
After this, you will need to renegotiate the loan payments with your lender.
Line of credit
A line of credit loan allows borrowers to withdraw cash from their loan up to a certain limit as and when they choose. Each month the loan balance is reduced by the amount of cash coming in and increased by the amount paid for drawings, direct debits or cash withdrawals.
There are usually no set repayments, so this loan is best suited to experienced investors with the discipline to manage the loan carefully.
If you are wanting to get started with investing in property, take a minute and watch our short video!
Together with our financial planner and accountant, we will guide you through every step of the way, to help you make the best investment decision you possibly can.
If you'd like to discuss your situation with a mortgage broker or financial planner in the Shire, then please feel free to email me here or call Mortgage Choice in Gymea on 02 9525 4544.