1. Seek professional financial and legal advice
There are a number of tax and legal ramifications, so it’s vital to seek professional advice from a financial adviser or accountant before deciding on a strategy. It’s a good idea to then involve your solicitor in the purchase process.
2. Carefully consider positive vs. negative gearing
Consult your accountant or financial adviser when deciding whether to positively or negatively gear your property. Your adviser will be able to help you determine which gearing option is of greater benefit to your financial needs.
3. Choose the most suitable loan
There are many loans available and the right one depends on your investment strategy. Consult with me, your local Mortgage Choice broker, to find a loan that is tailored to you.
4. Consider interest only vs. principal and interest loans
When deciding on a loan type, look at interest only vs. principal and interest repayments. Although interest only loans will not reduce the loan amount, they result in lower monthly repayments (perhaps allowing greater contributions to the loan on your principal place of residence).
5. Take a long-term approach
As with all investment strategies, a longterm approach should be taken. If you choose carefully you could expect good annual returns and, depending on market conditions and personal circumstances, you could look at keeping the property for 7-10 years or more.