An update from Managing Director Daryl Borden - as seen in the Dingley Dossier
Buying your own home remains the great Australian dream – and purchasing a second property may help you take your wealth further. Whether you’re building your property investment portfolio, buying a holiday house or supporting a family member, there are plenty of things to think about before you take that next step.
Consider your cashflow
Property tends to be a long-term investment, so do your sums to make sure you can afford the ongoing repayments on two mortgages. Also think about any major life changes on the horizon. For example, you may be planning to expand your family, or you might need to support a parent in the coming years.
Get to know the market and location
Research what’s happening in the current market and whether it’s the right time for you to buy. Get to know the area you’re considering by speaking to local residents and real estate agents. It’s also wise to look into the short and long-term planning for the area. For example, nearby construction may affect your ability to find a tenant.
Investigate before you invest
If you’re buying a property as an investment, carefully consider property type and location. Buying high-demand and limited supply property is likely to see greater capital gains, and a more constant flow of income from the rent.
You’ll need to provide your lender with a rental estimate letter, which you can get from the agent managing the property. Keep in mind that generally lenders only take 70–80% of the rental income into account when calculating whether you can afford the loan.
Choose the right mortgage
The amount you can borrow and the type of loan you choose will depend on various factors, including the equity in your current home, your income and expenses, and your property valuation. It helps to get quality advice on the right mortgage for you, along with other considerations such as negative gearing, and how to structure your loan to maximise tax effectiveness.
Whatever your reason for considering a second property, being well-informed will ensure a smoother purchasing process and a financially secure future.
Daryl Borden, Integrity Finance Australia Ph. 03 9511 8883 ACL 392184