Strategy 2: Low deposit loans
While lenders like to see a 20% deposit, many will accept far less. In fact, it could be possible to borrow up to 95% of a property’s value. This means you may only need a deposit of just 5% to buy a rental property, which can be a lot more achievable than 20%.
When your deposit is below 20%, the lender will likely ask you to pay lenders mortgage insurance (LMI). Your Mortgage Choice broker can let you know the possible LMI premium for your situation.
Strategy 3: Buying your first home as an investment property
Buying an investment property rather than an owner-occupied home could open up a much wider choice of properties and locations because you don’t need to focus on your personal needs or preferences. So, it could be a great way to buy in an affordable location and take that important first step into the market.
This strategy could mean missing out on financial incentives like the First Home Owner Grant. However, you will have the benefit of regular rental income and potential tax savings, both of which can make it a lot easier to manage your loan repayments.
Strategy 4: Guarantor loans
Parents can help their adult kids become investors, by agreeing to act as a guarantor for the investment loan.
No cash changes hands – in most cases, mum and dad just need to have sufficient home equity to provide a guarantee in place of a cash deposit. Some lenders allow limited guarantees, letting parents specify how much of the loan they agree to guarantee, which can provide additional peace of mind.