Purchasing an investment property can be one of the best ways to ensure your financial security in retirement. Building a property portfolio over time is a proven wealth creation method which is why it’s now one of the most popular choices for investing. But it can also be risky, particularly if you haven’t been given the right information and advice.
The first thing you need to think about is how much you can borrow. Your borrowing capacity is determined by a number of factors including your income, debts, credit history, home equity, and even your super. Most of us don’t have a spare few hundred thousand dollars lying around so you will more than likely need to borrow quite a large sum. Although it can see very daunting to take on another mortgage, there are many ways in which an investment loan differs from a home loan and many tax advantages to owning an investment property that make the process more lucrative.
One of the biggest outlays will be your deposit which in most cases is around 10% of the purchase price. You should then allow roughly 5% for other costs such as stamp duty, legal costs and insurances. Your broker will be able to go through the costs with you and they can also help you decide on what sort of loan you will take out. Whether that means borrowing against your home, creating an offset account or using your super from your SMSF.
The most important thing you can do throughout the process is to seek advice from a third party such as a financial planner or advisor. They will help you make the right decisions to ensure your financial security.
If you are considering taking out an investment loan, contact our professional team today for the best advice.