March 21, 2017
Why invest in property?
Investment properties have many benefits when building long-term wealth. If you take the time and select your investment properties well, property can deliver good returns for long-term investors.
If you are thinking of arranging loans to secure an investment property, consult with us to secure a suitable loan that will help to minimise your risk and maximise your return.
Will an investment loan be any different to my existing loan?
There are few differences between what you need to do to borrow for a property you'll live in and for one you'll rent out. Some lenders charge a higher interest rate for investment properties because their risk may be higher. But this may not necessarily be the case.
If you’re unsure how an investment loan would potentially impact your financial circumstances, we can help you to explore the implications.
Can I use the equity in my home as a deposit?
If you've owned your own home for a few years, you could have built up quite a bit of equity in your property. Equity is the value of an asset not subject to any lender’s interest. For example, a property worth $500,000 with a mortgage loan of $150,000 has equity of $350,000. Instead of finding a cash deposit to buy an investment property, you could use this equity as the deposit.
What fees and charges should I consider?
When you buy a property, costs such as establishment fees, solicitor fees and stamp duty add up to several thousand dollars. Instead of trying to find cash to pay these fees, take them into account in your borrowings. That means you don't need thousands upon thousands of dollars in savings to get started. Find out more on how to minimise your cash outlay and consult with us today.
What’s negative gearing?
A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceeds the income it produces. Simply put, your investment must make a loss before you can claim a tax benefit.
What’s positive gearing?
You can also positively gear a property. This occurs when the investment income exceeds your interest expense (and other possible deductions). Note that you may be subject to additional tax on any income derived from a positively geared investment.