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Increased competition between lenders means there could be advantages in reviewing your mortgage on a regular basis. Your mortgage broker can help you compare packages across lenders to find one with an interest rate and features to help save you money and pay off the loan sooner.


Prices are down. Rents are high. It's the ideal time to invest in a rental property.

Australians are keen property investors – and with good reason. A recent survey found residential property delivered the highest returns of any mainstream investment over the past 10 and 20 years.

How high? According to the report from the Australian Securities Exchange/Russell Investments, over the 10 years to December 2011, landlords earned an average annual return of around 8.0% on residential property. The 20-year annual return of 9.0% is even better. By comparison, Australian shares returned 6.1% and 8.7% per annum over the same periods*.

Of course, past results are no guarantee for the future. But an investment property offers more than strong long term returns. Tax savings are also available as many of the costs of owning the property including loan interest can be claimed on tax, and this can make an investment property very affordable.

An investment rather than a first home

The pluses of investing in property certainly stack up. So it's no surprise that a growing number of first time buyers are opting to make their first property purchase a rental investment rather than an owner occupied home. It's a strategy that can offer the best of both worlds.

As one Mortgage Choice broker puts it, First home buyers may be eligible for a range of government grants and subsidies, and you may only need to live in the property for six months within the first year following purchase to qualify for these funds. After this, some first home buyers are tenanting their property to help pay it off while moving back into the family home to save money.”

It can be a smart and entirely legitimate way for first timers to get a foothold in the property market. However it pays to speak with us as the conditions and eligibility for first home buyersupport varies between states and territories.

Investors enjoy a key advantage

One of the advantages investors have over owner occupiers is the ability to make a property purchase based on facts rather than emotion – and it can give investors a valuable edge.

The consensus of Mortgage Choice brokers is that when choosing somewhere to live, house hunters generally look for a place close to work, schools, family and friends.  As an investor, you are free to focus on locations with good capital growth prospects – and that's an important starting point when it comes to making money from property.

Strategies for home owners

Today's climate of cooler property prices coupled with high rents and low vacancy rates is making an investment property much more affordable. Part of the appeal for established home owners is that it's not always necessary to have a cash deposit.

Our experience suggests that couples or mums and dads who own their home may not realise that they can use home equity (the property's value less the balance of the loan) to fund an investment property.

In fact, if you have cash savings it can make better financial sense to pay down your home loan then use your equity as security for an investment property. This is because the loan interest on a rental property can be claimed as a tax deduction – a tax break that doesn't apply to your own home.

It's an approach that may not suit everyone but it's worth considering as a way to put home equity to work.

Regardless of whether you're a first timer or an existing home owner, your local Mortgage Choice broker can discuss the various options available to fund an investment property. Together with the right loan, you could be building the foundations of personal wealth and security.

Useful links:

*Source:
http://www.russell.com/AU/financial-professionals/publications-and-tools/market-insights/long-term-investing-report-2012/

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