- May 16, 2012
- Posted by: admin
- Category: Budget, Financial goals, House prices, Wealth
A large bank balance is not a prerequisite for affording an investment property.
There are many options available to help you get a foot in the door including using home equity, tax incentives and tailored investment loans.
If you already own a property, you can use its equity (‘unrealised value’) to fund your next property purchase. Equity is the difference between your home’s market value and the balance of your mortgage, so when your property increases in value, the amount of equity also increases. Refinancing your mortgage allows you to access this increased equity to use as a deposit on another property purchase.
The property you live in is not the only source of equity – you can use the equity in your business, parents’ home or an investment property. Contact us for help in working out how much equity you may have available and how it can be used as a source of funding.
Negative gearing lets you invest in an asset of greater value than you could afford using your own money. It occurs when you borrow to invest in an income-producing property, which costs more to own and maintain than the rental income you receive from it. This ‘loss’ can be claimed as a tax deduction, reducing the tax you are required to pay on income earned elsewhere, such as from a salary.
Contact us to find out more about negative gearing and what precautions you should have in place to ensure this investment strategy works for you.
Choose your loan carefully because the way you fund your investment property will impact on the returns you receive. Investment loans differ in their structure and flexibility – while one might be designed to help you reduce your debt more rapidly, another might be designed to help you purchase more investment properties in the future.
There are a range of loan features especially useful for investors such as interest only, interest in advance, mortgage offset, split loan and line of credit.
We can work with you to match your investment goals to the right type of loan from our large panel of lenders.